OPEC+ has its latest meeting on Saturday, which could add volatility to oil.
UKOIL – Daily Chart
The Brent crude benchmark has found support at $81.10 and resistance above $84.40.
Another focus this week will be US PCE inflation figures. A group of Federal Reserve officials remained hawkish on inflation next week, and PCE is their preferred price gauge. Investors must see prices slow before making new bullish bets on stocks and commodities.
An unexpected build in US inventories also weighed on the price of global oil benchmarks last week. However, Monday kicks off the summer driving season in the United States, which could help reduce inventories again.
Oil markets are anticipating a meeting of the OPEC+ group on June 2, during which the producer group is predicted to extend its ongoing production cuts past the previous end-of-June deadline. Extended production cuts and increased demand from global markets could spell tighter oil markets in the near term, boosting prices. OPEC expects demand to improve by 2.25 million barrels per day this year. In contrast, the International Energy Agency expects weaker demand growth at 1.2 million bpd.
UBS said last week that Brent crude prices could rise to $91 per barrel over the coming months due to a lack of supply. The investment bank noted the voluntary production cuts from OPEC+, which they expect to last three months.
“As in recent years, we see a mismatch between market sentiment toward oil and what demand-side tracking data indicates,” UBS analyst Giovanni Staunovo said.
“We retain a modestly positive outlook for crude prices over the coming months, supported by healthy demand and efforts by OPEC+ countries’ to keep the oil market in balance,” he added.
UBS also predicts demand growth of 1.5 mbpd for 2024, above the long-term annual growth rate of 1.2 mbpd. The brokerage said that data tracked by UBS supports a more robust growth picture.
