Oil prices remained steady in early Asian trading on Monday, with the market eagerly anticipating the OPEC+ meeting scheduled for June 2. This meeting holds significant importance as it is expected to address the continuation of voluntary output cuts for the remainder of the year.
USOIL – 4 Hour chart
The Brent crude July contract inched 11 cents to $82.23 a barrel by 0036 GMT. The more active August contract LCOc2 rose 13 cents to $81.97.
US West Texas Intermediate (WTI) crude futures rose 13 cents to $77.85.
Public holidays in the US and UK on Monday were expected to keep trading relatively thin.
OPEC said on Friday that the upcoming meeting of the Organization of the Petroleum Exporting Countries and allies, known as OPEC+, was pushed back by a day to June 2 and will be held online.
During the upcoming OPEC+ meeting, producers will deliberate on extending voluntary output cuts of 2.2 million barrels per day into the year’s second half. This decision, if implemented, could significantly impact oil prices, with three sources from OPEC+ countries suggesting that an extension is likely.
Combined with another 3.66 million bpd of production cuts valid through the end of the year, the output cuts are equivalent to nearly 6% of global oil demand.
OPEC anticipates another year of robust oil demand growth, projecting an increase of 2.25 million bpd. In contrast, the International Energy Agency is more conservative in its forecast, expecting a slower growth rate of 1.2 million bpd. This projection divergence underscores the market’s uncertainty and the need for careful analysis.
ANZ analysts said in a note that they will be watching gasoline usage as the Northern Hemisphere enters summer, which is traditionally a high season for driving holidays.
In their insightful note, ANZ analysts highlighted the importance of monitoring gasoline usage as the Northern Hemisphere enters summer, a traditionally high season for driving holidays. They also noted the potential impact of improved fuel efficiency and E.V.s on oil demand, which could be offset by rising air travel.
Markets will also watch the US personal consumption expenditures (PCE) index this week for more signals about interest rate policy. The index, due to be released on May 31, is reportedly the US Federal Reserve’s preferred measure of inflation.
Brent ended last week at about 2% lower. WTI lost nearly 3% in the week after meeting minutes from the Federal Reserve, which showed some officials would be willing to tighten interest rates further if they believed it was necessary to control persistent inflation.
The prospect of higher-for-longer interest rates has strengthened the US dollar, making oil more expensive for holders of other currencies.
