Oil prices increased on Tuesday amid expectations that the world’s largest oil consumer, the United States, will increase demand as a result of the debt ceiling agreement. Gains were restrained, however, by worries about future interest rate increases and the potential for OPEC+ to maintain current output quotas. Today morning, Brent crude futures had increased by 12 cents, or 0.5%, to $77.42 a barrel.
WTI crude for the United States gained 53 cents to reach $73.20 a barrel, up 0.7% from Friday’s finish. Due to a U.S. federal holiday, there was no settlement on Monday. While the agreement on the debt ceiling has encouraged investors to purchase riskier assets like commodities, major oil producers will meet on June 4 and it is uncertain whether they will decide to further reduce their output given the general decline in prices since the middle of April. Additionally, it is anticipated that U.S. interest rates would increase further, which might slow down economic expansion and, consequently, oil demand.
Investors are also closely monitoring any potential changes to the Organisation of the Petroleum Exporting Countries (OPEC) and its allies, which includes Russia, together known as OPEC+. Last week, Saudi Arabia’s Energy Minister Abdulaziz bin Salman advised short-sellers who were wagering that oil prices would decline to “watch out,” possibly indicating that OPEC+ may further reduce supply.
Thoughts from Russian oil officials and sources, such as Deputy Prime Minister Alexander Novak, suggest the third-largest oil producer in the world is inclined to maintain output. OPEC+ reduced its oil production by an additional 1.2 million barrels per day (bpd) in April, according to calculations by Reuters, bringing the total amount of cutbacks to 3.66 million bpd.
