Oil prices remained stable in early Asian trading on Tuesday as investors awaited inflation data to assess future monetary policy in the United States and production policy decisions from the OPEC+ meeting on June 2.
The price of Brent crude for July dropped by 3 cents to $83.07 a barrel, while the more-active August contract slipped by 4 cents to $82.85.
Meanwhile, U.S. West Texas Intermediate (WTI) crude futures for July were priced at $78.68, showing an increase of 96 cents, or 1.2%, from the previous Friday’s close. It is worth noting that these futures were traded during the Memorial Day holiday in the United States without a settlement.
On Monday, oil prices rose by over 1% in low-volume trading due to public holidays in Britain and the United States. This increase followed a week of subdued market activity and concerns regarding U.S. interest rates amidst persistent inflation.
According to Satoru Yoshida, a commodity analyst with Rakuten Securities, investors are closely monitoring U.S. inflation data in order to determine when rate cuts may occur. Additionally, the market is keeping a close eye on the upcoming meeting by OPEC+ to gauge its impact on oil prices. Yoshida expects oil prices to rise in the near future due to anticipated voluntary output cuts by oil producers and the potential easing of U.S. monetary policy. The start of the U.S. driving season is also expected to provide support. The U.S. personal consumption expenditures index, which is considered the U.S. Federal Reserve’s preferred measure of inflation, will be released on May 31 and will be closely watched for further signals about interest rate policy.
This week, market watchers will be closely monitoring German inflation data on Wednesday and euro zone readings on Friday to gauge the likelihood of a European rate cut scheduled for next week.
Another important event to keep an eye on is the upcoming online meeting of OPEC+ on June 2. During this meeting, producers will discuss the possibility of extending voluntary output cuts of 2.2 million barrels per day into the second half of the year. Three sources from OPEC+ countries have suggested that an extension is likely.
In other news, Goldman Sachs has revised its global oil demand forecast for 2030, predicting a peak in consumption by 2034 due to a potential slowdown in electric vehicle (EV) adoption. This projection implies that refineries will continue to operate at higher-than-average rates until the end of the decade.