Oil prices surge amid expectations of sustained output cuts

Oil prices rose in Asian trading on Wednesday, driven by expectations that major producers will maintain output cuts at a meeting this Sunday. Additionally, the start of the peak summer demand season is anticipated to boost fuel consumption.

By 0630 GMT, Brent crude futures for July delivery had increased by 18 cents, or 0.2%, reaching $84.40 a barrel. Similarly, U.S. West Texas Intermediate futures for July had climbed 28 cents, or 0.3%, to $80.11. Both benchmarks had gained over 1% the previous day.

Traders and analysts predict that the Organization of the Petroleum Exporting Countries and its allies, including Russia (collectively known as OPEC+), will maintain voluntary production cuts amounting to approximately 2.2 million barrels per day.

Sugandha Sachdeva, founder of the Delhi-based research firm SS WealthStreet, stated that the anticipation of OPEC+ extending their output cuts has injected optimism into the markets. This move is seen as a concerted effort to stabilise prices and rebalance the global oil market.

“Furthermore, the onset of the summer driving season in the U.S. spurs a seasonal uptick in consumption and typically aids a positive momentum in crude oil prices,” she added. The Memorial Day holiday on Monday marks the start of the peak demand season in the U.S., the world’s largest oil consumer, and maintaining the production cuts should support prices as consumption rises.

Daniel Hynes, senior commodity strategist at ANZ Bank, noted in a statement that initial data suggests a relatively high number of U.S. holiday trips were taken over the Memorial Day holiday, which traditionally signals the start of the driving season. He also highlighted strong air travel.

The prices received further support from increased fighting in the Gaza Strip, where Israeli tanks advanced to the heart of the Rafah section. This escalation raised concerns about a potential widening of the conflict to the greater Middle East, a crucial supply region.

Investors are also closely watching for U.S. crude inventory data from the American Petroleum Institute, which is expected to be released later in the day. The data was delayed by a day due to the Memorial Day holiday.

Union Jack Oil plc (LON:UJO) is an onshore oil and gas exploration company with a focus on drilling, development and investment opportunities in the United Kingdom hydrocarbon sector.

Click to view all articles for the EPIC:
Or click to view the full company profile:
Facebook
X
LinkedIn
Union Jack Oil

More articles like this

Union Jack Oil

Steady rise in Oil Prices amid market optimism

Oil prices climbed in Asian trading on Friday, marking a third consecutive weekly increase. This rise is driven by growing expectations that the US central bank will soon lower interest rates, coupled with strong complex refining

Union Jack Oil

Oil prices edge higher amid Middle East tension

Oil prices experienced a slight increase on Wednesday, despite an unexpected rise in U.S. gasoline supplies, as investors expressed concerns about potential disruptions in crude supplies from the Middle East due to escalating tensions in Gaza.

Union Jack Oil

Union Jack Oil West Newton early production plan technically robust

Union Jack Oil plc (LON:UJO, OTCQB: UJOGF) a UK and USA focused onshore hydrocarbon production and development company, notes today’s announcement from Reabold Resources plc in respect of the West Newton project contained within PEDL183.  The Announcement provides

Union Jack Oil

Oil prices rise with interest rate cut expectations

Oil prices continued to rise on Thursday, bolstered by growing expectations of an interest rate cut from the U.S. Federal Reserve in September. This potential rate cut provided support despite being tempered by an OPEC+ plan

Union Jack Oil

Union Jack Oil in sound financial health with a robust Balance Sheet

Union Jack Oil plc (LON:UJO) (OTCQB: UJOGF), a UK and USA focused onshore hydrocarbon production, development, exploration and investment company, has announced its audited results for the year ended 31 December 2023. Operational Highlights •      Flagship Wressle project

Union Jack Oil

Oil prices steady as investors await key data

Oil prices were little changed on Tuesday as investors waited on data this week, including U.S. inflation indicators and a monthly report from the Organization of the Petroleum Exporting Countries. Brent crude futures fell 18 cents

Union Jack Oil

Union Jack Oil declares Dividend of 0.25 pence per share

Union Jack Oil plc (LON:UJO; OTCQB:UJOGF), a UK and USA focused onshore hydrocarbon production, development, exploration and investment company, has announced, further to its notification of 17 April 2024, the details of a dividend payable to shareholders. The