Price action
Brent crude futures for July delivery increased by 27 cents, or 0.3 percent, to $84.49 per barrel by 0042 GMT. US West Texas Intermediate crude futures for July rose 35 cents, or 0.4 percent, to $80.18.
Traders and analysts expect the OPEC+ alliance, which includes the Organization of the Petroleum Exporting Countries (OPEC) and its allies, including Russia, to maintain the voluntary production cuts, which total about 2.2 million barrels per day.
An official holiday commemorating the victims of American wars on Monday marks the beginning of the peak demand season in the United States, the world’s largest oil consumer. Maintaining production cuts would keep prices high while increasing consumption.
“Preliminary data suggests that a relatively large number of holiday trips in the United States were taken over Memorial Day weekend, the traditional start of the driving season,” Daniel Haynes, chief commodity strategist at ANZ Bank, said in a note. “Air travel was also Strong too.”
The intensification of fighting in the Gaza Strip provided some support for oil prices amid fears that the conflict would spread to other regions in the Middle East.
Investors are also awaiting US crude inventory data from the American Petroleum Institute, which will be released later on Wednesday. The data release was delayed by a day due to Monday’s holiday.
A preliminary poll conducted by Reuters on Tuesday showed that US crude oil inventories are expected to decline by about 1.9 million barrels last week.
Investors are also awaiting US inflation data this week, which may affect expectations regarding Federal Reserve (US central bank) cuts in interest rates, which may be positive for oil prices.
The US core personal consumption expenditures price index report for April, the central bank’s preferred measure of inflation, is due later this week. Inflation is expected to remain unchanged on a monthly basis.
Expectations about the timing of interest rate cuts have fluctuated as policymakers are concerned as data continues to point to continued inflation.
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