During European morning hours on Monday, crude oil futures experienced a slight uptick as markets sought fresh momentum following last week’s losses and lackluster performance throughout May.
The front-month Jul24 ICE Brent futures were observed trading at $82.41/b (0900 GMT), a marginal increase from Friday’s settlement of $82.12/b, with the Aug24 contract also showing a modest rise to $82.17/b.
Simultaneously, Jul24 NYMEX WTI was trading at $78.04/b, compared to Friday’s settle of $77.72/b, amidst subdued trading due to holidays observed in the US and UK.
The commencement of the Memorial Day weekend in the US typically heralds the beginning of the driving season, accompanied by a surge in gasoline demand. However, this anticipated spike in demand has yet to exert a notable influence on oil markets.
Slobodan Drvenica of Windsor Brokers noted, “Investors maintained short positions, apprehensive of hawkish signals from the US central bank potentially dampening demand prospects. Despite the multi-month high in US gasoline demand, oil prices have yet to witness a significant positive impact.”
Nevertheless, economists maintain a cautious optimism, foreseeing a potential boost in demand growth during the summer driving season. Recent data from the EIA indicates a rise in US gasoline consumption to 9.32 million bpd, a weekly increase of 400,000 bpd, albeit trailing behind the figures from the same week in 2023 by 1.2%.
Investor attention is also directed towards the upcoming OPEC+ meeting scheduled for the following weekend, where discussions will revolve around the extension of voluntary production cuts amounting to 2.2 million bpd.
However, subdued price performance this month has limited the group’s flexibility, with a rollover of the current production cuts widely anticipated for at least another quarter.
Furthermore, sentiment towards the European economy has shown signs of improvement following lackluster growth in 2023. Expectations for interest rate cuts are growing amidst signals from the European Central Bank (ECB), which Danske Bank notes a clear intention to deliver a 25 basis points rate cut at the meeting on June 6th. Despite lingering uncertainties, European growth appears to have rebounded in 2024, with easing headwinds even in the previously hard-hit manufacturing sector.
