Oil Prices Stabilize Amid U.S. Interest Rate Speculation
Oil prices remained largely unchanged on Monday, showing marginal gains in subdued trading due to public holidays in both Britain and the United States. The market had experienced a downbeat week primarily influenced by the outlook for U.S. interest rates amidst persistent inflationary pressures.
The Brent crude July contract edged up by 21 cents to $82.33 a barrel by 0926 GMT, while the more active August contract rose 26 cents to $82.10. U.S. West Texas Intermediate (WTI) crude futures also saw a modest increase of 23 cents, reaching $77.95.
Last week, Brent lost approximately 2% and WTI nearly 3%, following the release of Federal Reserve minutes indicating that some officials would consider raising interest rates further to combat stubbornly high inflation.
„Sentiment in the oil complex has been jittery as investors continuously reassess their expectations regarding the Federal Reserve’s monetary policy,“ noted Vandana Hari, founder of oil market analysis provider Vanda Insights.
Shifting Rate Cut Expectations
Recent economic data from Western nations has led to varying expectations regarding rate cuts. Analysts at Bank of America suggested that the European Central Bank might implement a cut in June, whereas investors are preparing for sustained higher rates in the United States.
Attention is focused on the upcoming U.S. personal consumption expenditures (PCE) index, scheduled for release on May 31, which is considered the Federal Reserve’s preferred gauge of inflation. Additionally, German inflation data on Wednesday and euro zone readings on Friday will be closely monitored for indications of a potential European rate cut, anticipated by traders for the following week.
OPEC+ Meeting on the Horizon
Market participants are eagerly anticipating the upcoming meeting of the OPEC+ group, comprising the Organization of the Petroleum Exporting Countries (OPEC) and allied producers like Russia, scheduled for June 2.
Sources within OPEC+ have suggested that an extension of output cuts totaling 2.2 million barrels per day is likely to be agreed upon during the meeting, indicating a commitment to stabilize oil markets amidst ongoing uncertainties.
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