Crude Oil Prices Steady as Markets Anticipate OPEC+ Meeting

Mumbai, 27 May (Commoditiescontrol): Crude oil prices held steady in early Asian trading on Monday as markets eagerly awaited the upcoming OPEC+ meeting on June 2. During this meeting, producers are expected to deliberate on maintaining voluntary output cuts for the remainder of the year.

In trading, the Brent crude July contract edged up 11 cents to $82.23 per barrel, while the more-active August contract rose 13 cents to $81.97. U.S. West Texas Intermediate (WTI) crude futures also increased by 13 cents, reaching $77.85 per barrel. Public holidays in the U.S. and UK on Monday were anticipated to keep trading volumes low.

The Organization of the Petroleum Exporting Countries and its allies, collectively known as OPEC+, rescheduled their meeting to June 2, opting for an online format. The group will consider extending the current voluntary production cuts of 2.2 million barrels per day into the second half of the year. Three sources from OPEC+ countries indicated that an extension is likely. These cuts, combined with an additional 3.66 million barrels per day reduction valid through the year-end, represent nearly 6% of the global oil demand.

OPEC forecasts robust oil demand growth of 2.25 million barrels per day this year, while the International Energy Agency predicts a slower increase of 1.2 million barrels per day.

Analysts from ANZ highlighted the significance of gasoline consumption as the Northern Hemisphere enters summer, traditionally a peak period for driving holidays. They noted that despite expectations for a post-COVID surge in U.S. holiday travel, improved fuel efficiency and the rise of electric vehicles might keep oil demand subdued. However, this could be balanced by increased air travel.

Additionally, markets are eyeing the U.S. personal consumption expenditures (PCE) index, due for release on May 31, for clues on interest rate policy. The PCE index, reportedly the Federal Reserve’s favored inflation gauge, is pivotal for assessing potential rate adjustments.

Last week, Brent crude fell by about 2%, and WTI dropped nearly 3% following Federal Reserve meeting minutes, which revealed that some officials are open to further interest rate hikes if necessary to curb persistent inflation. The prospect of prolonged high interest rates has bolstered the U.S. dollar, making oil pricier for holders of other currencies.

(By Commoditiescontrol Bureau: 09820130172)