27-05-2024 09:00 AM | Source: Reuters
Oil prices little changed as markets look to OPEC+ meeting

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Oil prices were in a holding pattern in early Asian trading on Monday as markets awaited an OPEC+ meeting on June 2 where producers are expected to discuss maintaining voluntary output cuts for the rest of the year.

The Brent crude July contract inched up 11 cents to $82.23 a barrel by 0036 GMT. The more-active August contract LCOc2 rose 13 cents to $81.97.

U.S. West Texas Intermediate (WTI) crude futures rose 13 cents to $77.85.

Public holidays in the U.S. and UK on Monday were expected to keep trading relatively thin.

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, OPEC said on Friday.

The producers will discuss whether to extend voluntary output cuts of 2.2 million barrels per day into the second half of the year, with three sources from OPEC+ countries saying an extension was 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 has said it expects another year of relatively strong oil demand growth of 2.25 million bpd, while the International Energy Agency expects much slower growth of 1.2 million bpd.

ANZ analysts said in a note that they will be watching gasoline usage as the Northern Hemisphere enters summer, traditionally a high season for driving holidays.

"While U.S. holiday trips are expected to hit a post-COVID high, improved fuel efficiency and EVs could see oil demand remain soft," the analysts said. But they added that could be offset by rising air travel.

Markets will also be watching the U.S. 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 U.S. Federal Reserve's preferred measure of inflation.

Brent ended last week about 2% lower and WTI lost nearly 3% in the week after meeting minutes from the Federal Reserve 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 U.S. dollar, making oil more expensive for holders of other currencies