Oil prices are holding near their lowest levels in three months due to ample near-term supplies. The decrease in geopolitical risks and indications of sufficient global market supply ahead of the OPEC+ meeting next month are being taken into consideration by traders. The prompt spread for Brent crude, the global benchmark, is at 26 cents, approaching a bearish contango structure that suggests an abundance of supplies in the near future. Although Brent and West Texas Intermediate futures saw a slight increase on Friday, they experienced weekly declines of over 2% and are currently trading close to their lowest levels since February. The market has been influenced by bearish sentiment as geopolitical premiums are being discounted and concerns about supply and demand balance are growing, according to Arne Lohmann Rasmussen, head of research at A/S Global Risk Management.
As the Memorial Day holiday weekend marks the beginning of the peak driving season in the US, traders are eager to gain more insight into fuel demand. Despite a recent decline in oil prices since mid-April, Brent crude remains up approximately 7% this year, partly due to OPEC+’s production cuts of 2 million barrels per day and ongoing geopolitical risks. The OPEC+ alliance is scheduled to meet on June 2, with expectations of extending output cuts into the second half of 2024. The decision to hold the meeting online further supports the anticipation of continued cuts, as stated by Viktor Katona, the head crude analyst at market intelligence firm Kpler Ltd.
