Ahead of the upcoming OPEC+ meeting, oil prices experienced their largest increase in two weeks on Thursday. The passage of a bill by the House of Representatives to suspend the U.S. debt ceiling provided some offset to the effect of rising inventories in the country, as reported by Reuters.
Oil production strategies
On June 1st, U.S. West Texas Intermediate crude (WTI) and Brent crude futures experienced significant gains, with WTI rising by 3% and Brent increasing by 2.3%. This followed two consecutive sessions of losses and was attributed to the House passing a bill to suspend the U.S. government’s debt ceiling, reducing the risk of default. However, uncertainties remain in the overall demand outlook, particularly in the trucking sector. Additionally, market attention has shifted towards the upcoming June 4 meeting of OPEC+ to discuss oil production strategies.
Low oil prices
Ahead of the OPEC+ meeting, there is caution in the market regarding low oil prices, fueled by a warning from the Saudi energy minister. Sources from OPEC+ indicate that it is unlikely for the alliance to deepen supply cuts at the meeting. However, some analysts believe it is still a possibility due to disappointing demand indicators from China and the U.S. Additionally, U.S. crude oil stockpiles unexpectedly rose last week, with imports increasing and strategic reserves reaching their lowest level since September 1983. The market is currently influenced by the balance between seasonal and cyclical factors, with experts monitoring the strength of the developed world’s summer demand compared to China’s recovery to assess the effectiveness of OPEC+ actions.
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Source: Reuters
