Oil prices saw a slight uptick on Monday, marking a modest recovery from significant losses endured last week. Traders are eagerly awaiting further cues regarding U.S. inflation and the upcoming meeting of the Organization of Petroleum Exporting Countries (OPEC).
However, trading activity is anticipated to be subdued due to market holidays observed in both the U.S. and the U.K. Brent oil futures for July delivery edged up by 0.1 percent to reach $82.22 per barrel, while West Texas Intermediate crude futures rose by 0.2 percent to $77.85 per barrel as of 20:41 ET (00:41 GMT).
Both oil contracts experienced declines of over 2 percent last week, reaching February lows amidst concerns over persistently high interest rates, which have raised apprehensions about future demand. This week’s focus will be on the U.S. personal consumption expenditures (PCE) price index data, considered the Federal Reserve’s preferred inflation gauge.
Fed Warnings and Inventory Growth Impact Prices
The recent market sentiment was influenced by numerous warnings from Fed officials regarding persistent inflationary pressures. These warnings led traders to adjust expectations of potential interest rate cuts in the current year. Market concerns regarding the impact of high interest rates on economic activity and crude demand persisted. Additionally, unexpected growth in U.S. inventories exerted further downward pressure on prices, despite anticipated demand growth with the onset of the summer travel season.
Anticipation Builds for OPEC+ Meeting
Market attention is also directed towards the upcoming OPEC+ meeting on June 2, where the producer group is expected to deliberate on the extension of ongoing production cuts beyond the end of June. The prospect of extended cuts, coupled with potential demand improvements, could result in tighter oil markets in the near term, thereby supporting prices. OPEC forecasts demand to increase by 2.25 million barrels per day this year, while the International Energy Agency (IEA) anticipates weaker demand growth of 1.2 million barrels per day.
