Oil prices ticked higher on Friday as focus turned to the OPEC+ supply meeting on Sunday, but prices were set for a second-straight weekly decline on overall demand concerns.
“The probable extension of the voluntary production cuts by OPEC+ should cause oil prices to rise again, Commerzbank analysts said, which according to them will ultimately threaten a significant undersupply on the oil market in the third quarter.
“This is all the more likely if the sentiment indicators in the two largest consumer countries (United States and China) brighten and point to an upturn in demand for oil,” they added.
Brent crude (CO1:COM) rose +0.19% to $82.04, WTI crude (CL1:COM) was up +0.11% to $78.00.
The producer group is currently cutting output by a total of 5.8M bbl/day, which include 3.66M bbl/day by OPEC+ members valid through to the end of this year, and 2.2M bbl/day of voluntary cuts by some members which expire at the end of June.
While some market participants are assuming that the voluntary production cuts will be extended by at least three months, there are reports that members are considering extending cuts into 2025.
“A full rollover of cuts is important for sentiment, but fundamentally it is not needed as it will push the oil market into a deep deficit over the summer, a peak demand period,” ING analysts said.
There are a number of important releases for the commodity markets next week, and if the economic indicators in China improve, following the weak purchasing managers’ index, this could also support sentiment on the base metals markets in the short term, Commerzbank analysts Carsten Fritsch, Barbara Lambrecht, Thu Lan Nguyen noted.
Elsewhere, European gas prices gained amid expectations of lower supply amid robust cooling demand across several regions. Norwegian gas flows to Europe in May averaged 293mcm/day, down from an average of 320mcm/day in April, ING reported.
Extreme temperatures across Asia have also pushed LNG demand higher in the region, as importers seek cargoes ahead of summer, with imports in South Asia hitting records. This could tighten available supply and further lift Asian spot prices that have already gained a third since April. Prices are now at a near six-month peak above $12 per million British thermal units (mmBtu) and are expected to remain elevated, as per Reuters.
Recent Commodity Price Movements and A look At Some ETFs
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Energy
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Commodity ETFs
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