Brent makes modest gains

The front-month ICE Brent contract inched $0.21/bbl higher on the day, to trade at $77.39/bbl at 09.00 GMT.

PHOTO: Getty Images

Upward pressure:

Brent futures made modest gains, supported by the OPEC+'s decision to extend supply cuts into the third quarter of this year.

The oil-producers' group decided to extend supply cuts till September-end, allowing its eight key members to continue their combined output reduction of 2.2 million b/d, which they started in November 2023.

The member nations also pledged to extend the combined output cut of 1.65 million b/d that was announced in April 2023, until the end of December 2025.

Oil prices found limited support after “the weekend’s meeting between OPEC and its allies saw the group extend its formal production agreement until the end of 2025,” ANZ Bank’s senior commodity strategist Daniel Hynes said.

Downward pressure:

Brent’s price fell below $78/bbl as concerns about oversupply in a demand-wary oil market emerged.

Crude oil inventories in the US gained 4.05 million bbls in the week ended 31 May, according to the American Petroleum Institute (API) estimates. A jump in US crude stocks is seen as a negative indicator of oil demand growth.

“A bearish overnight API release is likely to keep [downward] pressure on the [oil] market in the immediate term,” two analysts from ING Bank remarked.

Besides, some major oil producers including Saudi Arabia and Russia will gradually increase their production levels starting from October this year. This has supported the market’s “bearish” outlook, Hynes commented.

"Oil prices continued to decline as concerns about increased supply and [recently released] weak U.S. economic data unsettled traders," analysts from Saxo Bank said.

By Aparupa Mazumder

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