By Tom Kool
While inflation concerns dragged oil prices lower earlier on Monday, with U.S. consumer price data due out Tuesday, by late morning, anticipation of OPEC’s monthly report due on the same time bumped the two key crude oil benchmarks up at least half a percentage point.
On Tuesday, OPEC will release its Monthly Oil Market Report (MOMR), with its outlook for the coming period.
On Monday at 11:57 a.m. ET, the U.S. crude oil benchmark, West Texas Intermediate (WTI) was trading up 0.61% at $78.74, while Brent crude was trading up 0.34% at $83.07.
Last month, OPEC said in its monthly report that global oil demand for the summer was expected to be strong due to anticipation of rising transportation fuel consumption and holiday driving. The cartel said it sees a “robust oil demand outlook for the summer months”, and analysts are expecting more or continued optimism in Tuesday’s report. In the April report, OPEC left its oil demand growth forecasts unchanged for this year and next. The expected global oil demand growth rate is 2.2 million barrels per day for this year, with growth of 1.8 million bpd next year.
If OPEC+ does not move to reduce its current voluntary production cuts in July, analysts expect oil demand to remain strong in the second and third quarters, lending further support to the market.
U.S. inflation data is also due out Tuesday, and had put downward pressure on prices on Monday morning, with the Federal Reserve Bank of New York on Monday releasing the results of its latest survey showing that Americans are preparing for higher inflation in the coming months and years. Commentary from policymakers cited by Reuters indicates that expectations now are for Europe to cut interest rates before the United States does.
The ongoing Israel-Hamas war also continues to impact oil prices due to fears that an escalation of the conflict in the Middle East could crimp supply.
NB:Tom Kool wrote this article for Oilprice.com
