- As worries about decreasing demand were mostly outweighed by fears of supply interruptions in Russia and the Middle East, oil prices increased on Friday and were expected to rise further in June.
- Brent oil prices increased by 0.4% to $85.58 a barrel at 07:55 ET (11:55 GMT), while West Texas Intermediate oil futures increased by 0.4% to $82.09 a barrel.
Crude is expected to rise in June due to supply concerns
- Possible problems in Moscow’s energy supply were also hinted at by the Ukrainian attacks on significant Russian fuel facilities.
- Due to interruptions in oil supply, traders increased the risk premium attached to oil prices as a result of the geopolitical conflicts. This also increased the likelihood of tighter markets in the next months.
- Unfavorable meteorological circumstances, including as intense rains in Ecuador and a possible cyclone along the Gulf Coast, suggested even more possible supply delays.
PCE data may have an impact on attitude
- Growing optimism about an impending Fed easing cycle, which sparked a risk rally in most markets, has also helped set the tone.
- The CME FedWatch tool shows that traders are pricing in a 64% possibility of a first Fed reduction in September, up from 50% a month earlier.
- But later in the day, the Fed’s favored inflation gauge—U.S. personal consumption inflation data—might influence these views.
Arabia may stop providing OSPs to Asia.
- Conversely, according to Reuters on Friday, Saudi Arabia may lower the cost of the crude grades it exports to Asia for a second month in August as a result of the decline in Dubai, the region’s standard.
- Around 80% of Saudi Arabia’s oil exports go to Asia, thus the prospective price cut for this market highlights the strain on OPEC members as non-OPEC production rises and the world economy encounters challenges.
- According to a Reuters poll, the official selling price (OSP) for flagship Arab Light oil exported to Asia in August may drop by 60 to 80 cents a barrel from July, potentially to the lowest level since April.
Probes into US producers’ alleged collaboration with OPEC
- In an investigation into probable coordination between 14 domestic producers—including Exxon Mobil (NYSE: XOM), Chevron (NYSE: CVX), and ConocoPhillips (NYSE: COP)—and the Organization of Petroleum Exporting Countries to manipulate oil prices, the U.S. Senate budget committee began its investigation on Thursday.
- Over the last year, OPEC has reduced output on many occasions in an attempt to bolster oil prices, but the effect on the crude markets has been little.
- However, the cartel’s announcement during a meeting in June that it would continue producing at present levels to sustain prices until 2024 helped to drive up prices.
Source:
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