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Brent has shed almost 5% this month but is still up roughly 6% since the start of 2024.
In the first quarter of 2024, oil prices were initially supported by geopolitical risks and hopes around OPEC+ supply cuts tightening global markets. But gains have been capped in Q2 amid uncertainty over China’s demand and rising US crude inventories.
Still, oil benchmarks could kick off the first week of June with a bang! Here are 4 reasons why:
Over the weekend, OPEC+ is expected to extend current production cuts – possibly to the end of this year.
Considering that the cartel accounts for roughly 40% of total global oil supply, any decisions are likely to impact oil prices.
Note: Back in November 2023, OPEC+ agreed to voluntarily cut production by 2.2 million barrels per day through the first quarter of 2024. In March, these were extended through the end of June 2024.
With the spotlight on oil markets, attention will be directed toward the next EIA report published on Wednesday 5th June.
Interestingly, crude oil inventories decreased by 4.2 million barrels in the week ended May 24. However, US oil stockpiles have been climbing since the final quarter of 2023.
The US economy is expected to have created 180k jobs in May, while the unemployment rate to remain steady at 3.9%.
Considering how the NFP directly impacts interest rate expectations, it could influence oil prices.
Note: Lower interest rates could stimulate economic growth, translating to increased demand for oil. This may also weaken the dollar – supporting oil which is priced in dollars.
Brent is trapped within a range on the daily charts with support at $81.00 and resistance at $84.50. However, prices are trading below the 50, 100 and 200-day SMA while the MACD trades below zero.
Note: Oil prices may be influenced by the incoming US PCE data later today.
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