By Adedapo Adesanya
The two major crude oil grades, Brent and West Texas Intermediate (WTI), appreciated on Tuesday at the market on the expectation that the Organisation of the Petroleum Exporting Countries and its allies (OPEC+) will maintain crude supply curbs at its June 2 meeting, while the start of US summer driving season and a weaker Dollar also boosted the commodity.
The price of Brent crude futures went up by $1.12 or 1.4 per cent to $84.22 per barrel and the WTI rose by $2.11 or 2.7 per cent to $79.83 a barrel.
OPEC+ will hold a virtual meeting on Sunday to review its production policy as several members are voluntarily holding 2.2 million barrels per day off the market to support prices.
Some market analysts said OPEC+ countries are unlikely to raise production given that the current price of Brent is closer to $80 per barrel than $90 per barrel while another pointed out that “no changes in production will be forthcoming” because the meeting is virtual.
Support also came as the US Dollar slipped 0.1 per cent to a more than one-week low. This makes it cheaper for holders of foreign currencies to buy oil.
Trade on Monday was muted due to the holiday, and the market resumed with hopes of a demand boost from the first tradable day since the start of the US summer-driving and vacation season providing support.
Meanwhile, worries over US interest rates remaining elevated for a longer period contributed to a weekly loss for crude last week. Higher rates boost the cost of borrowing, dampening economic activity and oil demand.
Investors will watch the US core personal consumption expenditures price index (PCE), a main inflation gauge for the US Federal Reserve, due on Friday.
Air travel data also helped to buoy oil prices as US seat numbers on domestic flights for May rose by 5 per cent month on month and almost 6 per cent year on year to slightly above 90 million.
The continuing conflict in the Middle East, which on Monday included the death of an Egyptian security service member in an exchange of gunfire with Israeli forces, also helped boost oil prices.
Dipo Olowookere