Can Oil soar on June 2 OPEC+ cut hopes?

  • WTI crude futures rose toward $79 per barrel due to expectations that OPEC+ will extend its voluntary output cuts of 2.2 million barrels per day into the second half of the year at its June 2 meeting.
  • The upcoming U.S. inflation report is critical for assessing the Federal Reserve’s monetary policy path. A softer-than-expected reading could lead to earlier interest rate cuts, boosting economic growth and energy demand.

WTI crude futures and Brent continue to recover from three-month lows. The rebound is potentially driven by expectations that OPEC+ will extend its output cuts of 2.2 million barrels per day into the second half of the year during its June 2 meeting. 

Additional support for crude prices came from the start of the U.S. summer driving season and a weaker dollar. 

Further data on the demand side will come from upcoming U.S. PCE to gauge the Federal Reserve’s future monetary policy. A softer-than-expected reading on the PCE could increase the possibility of interest rate cuts, and potentially enhance the demand for energy. 

Deutsche Bank has maintained its Brent forecast at $83 per barrel for the second quarter and $88 for the second half of the year, assuming OPEC+ will sustain its current production policy on Sunday. 

Should prices move above the $80 level, WTI could test the 50-day moving average just above $81.1. The RSI suggests there is still room for prices to rise before reaching the overbought zone. Conversely, if prices fall below the $78 range, they might stabilize around the $76 mark. 

Import the BlackBull Markets Economic Calendar to iCloud, Google, or Outlook to get alerts direct to your inbox, enabling you to plan your positions in advance. 

    

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