May 31 2024: Oil prices remained stable on Friday as investors awaited U.S. inflation data for insights into future demand and looked forward to Sunday’s OPEC+ meeting to assess supply conditions for the upcoming year.
By 11:35 GMT, Brent futures for July delivery were down 5 cents at $81.81 per barrel, while the more liquid August futures rose 21 cents to $82.09. The spread between the two contracts reached an 11-month low after closing in contango for the first time this year on Thursday.
U.S. West Texas Intermediate (WTI) crude futures increased by 8 cents to $77.99 per barrel.
Both benchmarks are on track for their worst monthly declines since December, following a drop in the previous session due to an unexpected increase in U.S. fuel inventories.
Higher refinery utilization led to a larger-than-expected draw in crude oil stocks for the week ending May 24, according to data from the Energy Information Administration (EIA). However, gasoline inventories rose by 2 million barrels, contrary to expectations of a 400,000-barrel draw, despite higher demand anticipated for the Memorial Day weekend.
“U.S. summer travel season kicked off with Memorial Day weekend, with initial indications showing strong driving and flying activity — but fuel use looks more muted, implying efficiency gains,” Citi analysts noted.
Eurozone inflation rose more than expected in May, according to Eurostat data. Although this increase is unlikely to prevent the European Central Bank from reducing borrowing costs next week, it may slow or halt the rate-cutting cycle in the coming months.
The oil market has been under pressure recently due to concerns about prolonged high borrowing costs, which can restrict funds and reduce oil demand.
U.S. inflation data is scheduled to be released at 12:30 GMT.
Markets are also focused on the upcoming OPEC+ meeting on Sunday. The producer group is working on a complex deal to extend some of its significant oil production cuts into 2025, according to three sources familiar with OPEC+ discussions.
“OPEC+ is likely to stay in pre-emptive market management mode to keep contango away and prevent oil prices from spiraling to higher levels,” stated Rystad Energy analyst Mukesh Sahdev.
Meanwhile, analysts in a Reuters poll have lowered their 2024 oil price forecast for the first time since February, reflecting reduced supply risks from ongoing conflicts in the Middle East and Ukraine.
