Brent crude climbs as OPEC+ confirms policy meeting date

The front-month ICE Brent contract gained $1.27/bbl on the day from Friday, to trade at $82.28/bbl at 09.00 GMT.

PHOTO: Oil barrels. Getty Images

Upward pressure:

Brent prices moved higher following OPEC’s announcement to hold its highly anticipated policy meeting on 2 June. The coalition will discuss whether an extension of its voluntary supply cuts is required beyond June.

“All attention will be on OPEC+ which meets over the weekend,” two analysts from ING Bank remarked.

The recent decline in Brent’s prices has increased the likelihood of a full rollover of the ongoing 2.2 million b/d supply cut in the third and fourth quarters of this year.

“Fundamentally the market only needs to see a partial rollover, so there is a risk that OPEC+ overtightens the market in the third quarter of the year,” the ING analysts added.

Downward pressure:

The US Federal Reserve’s (Fed) monetary policy trajectory has dampened demand growth expectations and continued to put some downward pressure on Brent prices.

The US central bank reiterated last week that interest rates could remain elevated for a longer period as the bank’s central focus is fixated on bringing the inflation down.

Analysts from Saxo Bank noted that the recent decline in Brent crude prices is linked to worries about the Fed's position on interest rates and its potential effects on economic growth and oil demand.

Higher interest rates in the US can have a ripple effect on global demand growth by increasing the cost of commodities like oil for non-dollar holders.

By Aparupa Mazumder

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