Crude Oil News Today: Prices Climb as OPEC+ Nears Crucial Production Decision

Brent and WTI Crude Oil Prices Surge Ahead of OPEC+ Meeting

Crude oil prices for both international-benchmark Brent and U.S. benchmark West Texas Intermediate (WTI) experienced notable gains, propelled by expectations surrounding upcoming OPEC+ decisions and seasonal demand upticks. As traders anticipate an extension of production cuts, the market sentiment leans optimistic as the peak summer demand season commences.

At 10:05 GMT, Light Crude Oil futures are trading $80.49, up $0.66 or +0.83%.

Market Drivers

On the backdrop of a consensus among traders and analysts, the OPEC+ group, which includes the Organization of the Petroleum Exporting Countries (OPEC) and allies like Russia, is expected to maintain its voluntary production cuts. These cuts sum up to approximately 2.2 million barrels per day (bpd). This decision aims to stabilize the market and avert further downward pressure on prices, which have compelled several producers to accrue more debt and delay key projects.

Policy and Production Adjustments

OPEC+ has rescheduled its pivotal output policy meeting to June 2, transitioning from an in-person gathering in Vienna to a virtual format. This adjustment allows for continued strategic discussions as the group solidifies its stance on extending the current output restrictions. These include an additional 3.66 million bpd cuts, bringing the total to about 5.86 million bpd, representing roughly 5.7% of global daily demand.

Demand Indicators and Market Sentiment

The onset of the northern hemisphere’s summer has traditionally boosted demand for road and aviation fuels. Early signs of robust U.S. holiday travel during the Memorial Day weekend, marked by increased road trips and strong air travel figures, are supporting crude prices. Furthermore, market participants are closely monitoring U.S. crude inventory data, with forecasts suggesting a decrease in stockpiles, which could further tighten the market.

Market Forecast: Bullish

Looking ahead, the oil market exhibits a bullish outlook as the combined effect of sustained production cuts and a resurgence in demand could continue to push prices upward. The forthcoming OPEC+ meeting will be crucial in shaping short-term price movements, with a likely extension of cuts supporting higher price levels. Investors should also keep an eye on U.S. inflation data due later this week, which might influence market expectations regarding interest rate adjustments and subsequently, oil prices.

Technical Analysis

Light crude oil futures are trading higher on Wednesday after the short-term trend changed back to up the previous session. Further upside pressure in today’s session is likely to lead to a test of the 50-day moving average at $81.01. Taking out this level with conviction will change the intermediate trend to up.

The current short-term range is $86.64 to $76.15. Its 50% level at $81.40 is another upside objective and potential trigger point for an acceleration into $83.97.

On the downside, the support is a 200-day moving average at $78.19, followed by a short-term swing bottom at $76.15.