Oil prices rebound from losses

AAP

Oil prices have rebounded following sharp losses before the weekend as Iraq's top energy official told AFP that the country wants to tighten production amid sagging global demand forecasts.

Prices on Monday also tracked the dollar's weakening against the euro, which came after the ISM purchasing managers index for the US manufacturing sector in May took an unexpected turn into contraction territory, highlighting weakness in the economy.

In New York trade benchmark WTI crude for July delivery added $1.48 from Friday's finish, closing at $93.45 a barrel.

In London, Brent North Sea for July gained $1.67 at $102.06 a barrel.

Bob Yawger of Mizuho Securities said the market was oversold after prices sank on Friday following OPEC's Vienna meeting, where the cartel agreed to leave output unchanged at 30 million barrels a day despite a weakening demand picture globally.

Iraq's deputy prime minister responsible for energy affairs Hussein al-Shahristani told AFP in an interview that the country was negotiating with foreign oil contractors to lower long-term production targets because of sagging demand forecasts.

"We have revised the production plan for all the fields," said Shahristani, a former oil minister.

"Our budget is based on $90 ... We wish that the oil price will remain at the level above $90. Otherwise we have to revise our budget. We don't expect it to fall below $90."

Iraq currently exports about 2.6 million barrels per day, but has the potential to expand that as its oil industry revives.

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So, are we talking about the trading range, or optimism relating to US growth? The AUD should tell, that story.