Houston, May 29 – Oil prices experienced a rise of over 1% in subdued trading on Monday, influenced by public holidays in the United States and the United Kingdom. This increase comes after a challenging week marked by concerns over the outlook for US interest rates amidst persistent inflation.
Brent crude for July delivery closed at $83.12 per barrel, up $1 or 1.2%. The more actively traded August contract saw a similar increase, rising by $1.04 to settle at $82.88 per barrel. US West Texas Intermediate (WTI) crude futures also gained, ending 93 cents higher at $78.65 per barrel.
The prior week saw Brent crude losing approximately 2% and WTI nearly 3%, following the release of Federal Reserve minutes indicating some officials’ willingness to raise interest rates further if necessary to control inflation. This has led to a fluctuating sentiment among investors regarding the Federal Reserve’s monetary policy direction.
“Sentiment in the oil complex … has been skittish as investors are constantly recalibrating expectations for the Federal Reserve’s monetary policy trajectory,” said Vandana Hari, founder of oil market analysis provider Vanda Insights.
Economic data from Western economies has recently influenced rate-cut expectations, varying by region. On Monday, key European Central Bank (ECB) policymakers indicated that while there is potential to cut interest rates as inflation slows, the bank must proceed cautiously.
Upcoming inflation figures for the eurozone, due on Friday, are expected to show a slight increase to 2.5%. However, economists believe this should not deter the ECB from easing policy next week. Meanwhile, the US personal consumption expenditures index, anticipated on May 31, remains a focal point as it is considered the Federal Reserve’s preferred inflation measure.
Additionally, German inflation data on Wednesday and eurozone readings on Friday will be closely monitored for indications of a potential European rate cut, which traders have anticipated for next week.
Attention is also focused on the forthcoming meeting of the OPEC+ group of oil producers, which includes the Organization of the Petroleum Exporting Countries (OPEC) and allies such as Russia. Scheduled to take place online on June 2, the meeting is expected to result in an extension of the current output cuts of 2.2 million barrels per day, as suggested by OPEC+ sources earlier this month.
In related news, Goldman Sachs has revised its global oil demand forecast for 2030, predicting consumption to peak by 2034. This adjustment is based on a potential slowdown in the adoption of electric vehicles, which would necessitate higher-than-average refinery operation rates until the end of the decade.