Oil prices held gains ahead of OPEC's market outlook, with traders awaiting signals on whether supply curbs will be extended, as well as U.S. inflation data that will shape monetary policy expectations.
Brent crude was trading above $83 a barrel after rising 0.7% on Monday, with WTI nearing $79. With evidence of refinery runs and narrowing spreads between contracts pointing to a relatively resilient market, the detailed monthly report from the alliance comes about two weeks before members meet to decide on policy.
Meanwhile, in the United States, producer price data due later on Tuesday, followed by consumer data the following day, will provide clues as to whether the Federal Reserve has room to cut interest rates later in the year, or whether expectations of cuts will be pushed back to 2025.
downward trajectory
Crude oil has been on a downward trajectory since April, with the geopolitical risk premium from Middle East tensions largely easing. However, prices have remained elevated since the start of the year as OPEC and its allies have restricted flows, and the group is widely expected to extend the curbs into the second half.
“We believe OPEC+ is likely to keep current production plans unchanged, thus cementing the voluntary supply cuts,” said Vivek Dhar, an analyst at Commonwealth Bank of Australia. Against this backdrop, and with advanced economies expected to cut interest rates, Brent will average $80 a barrel in the third quarter and $85 in the final three months, he said.
