Oil prices rose in Asian trading on Wednesday on expectations that major producers will continue their production cuts when they meet this Sunday and that fuel consumption will start to increase with the start of the peak summer demand season.
Brent crude futures for July delivery rose 18 cents, or 0.2%, to $84.40 a barrel by 06:30 GMT. July West Texas Intermediate futures (WTI) rose 28 cents, or 0.3%, to $80.11. Both indicators gained more than 1% a day ago.
Traders and analysts expect the allies, known as OPEC+, to maintain voluntary production cuts of about 2.2 million barrels per day.
The prospect of OPEC+ members extending production cuts has injected optimism into markets, and the move is seen as a concerted effort to stabilize prices and rebalance the global oil market.
Additionally, the start of the summer driving season in the United States causes a seasonal increase in consumption and generally helps create positive momentum in crude oil prices.
Monday’s Memorial Day holiday marks the start of peak demand season in the United States, the world’s largest oil consumer and continued production cuts should support prices as consumption rises.
Preliminary data shows a relatively high number of U.S. holiday trips taken during the Memorial Day holiday, the traditional start of the driving season. Air travel has also been strong.
Increasing clashes in the Gaza Strip as Israeli tanks advanced towards the heart of the Rafah region also provided some support to prices due to concerns that the conflict would expand into the Middle East.
Investors are also eyeing US crude oil inventory data from the American Petroleum Institute (API), which will be released later in the day. The data was delayed a day due to Monday’s Memorial Day holiday.
US crude oil inventories are expected to decrease by about 1.9 million barrels last week, according to surveys.
Investors are also awaiting U.S. inflation data this week, which could impact expectations for a Fed rate cut and impact oil prices.
The US core Personal Consumption Expenditures Price Index report for April will be released on Friday. The inflation barometer is expected to remain stable every month.
While policymakers remained cautious as data still reflected sticky inflation, expectations regarding the timing of interest rate cuts were reversed.
