July 1 2024: Oil prices increased on Monday, supported by expectations of peak summer consumption and OPEC+ production cuts. However, gains were limited by rising output from other producers and potential economic volatility due to shifting political landscapes.
Brent crude futures rose 42 cents, or 0.5%, to $85.42 a barrel by 0845 GMT. U.S. West Texas Intermediate crude futures were up 44 cents, or 0.53%, at $81.97.
Both contracts gained about 6% in June, with Brent settling above $85 a barrel over the past two weeks following the extension of deep oil output cuts by the Organization of the Petroleum Exporting Countries (OPEC) and its allies, known as OPEC+, into 2025.
Analysts predict supply deficits in the third quarter as summer transportation and air-conditioning demands reduce fuel stockpiles.
On Friday, the Energy Information Administration (EIA) reported that oil production and demand for major products rose to a four-month high in April, supporting prices.
“Demand indicators look solid, especially in the all-important U.S. market, and peak refinery demand for crude is now firmly in place and should last through August,” JPMorgan analysts wrote in a client note.
Hopes of an interest rate cut by the U.S. Federal Reserve and rising geopolitical concerns in Europe and between Israel and Lebanon’s Hezbollah have also kept a floor under prices, IG analyst Tony Sycamore said in a note.
Traders are also monitoring the impact of hurricanes on oil and gas production and consumption in the Americas. The Atlantic hurricane season began with Hurricane Beryl on Sunday.
“Increased volatility is anticipated in wider markets this week as elections dominate the agenda in Europe and the UK, while in the U.S., concerns over President Biden’s fitness for office, let alone re-election, is dominating the news,” said Panmure Gordon analyst Ashley Kelty.
