Calm trend in oil
Oil remains steady as investors await the OPEC report and inflation data.
Oil continued its rise as investors looked for signs of whether supply curbs would be extended before OPEC released its market outlook and U.S. inflation data that will shape expectations for monetary policy.
Brent traded above $83 a barrel after rising 0.7 percent on Monday, and U.S. crude was near $79. The cartel’s monthly in-depth review, which points to a slightly softer market amid disruptions in refinery operations and narrowing windows, comes about two weeks before members meet to decide policy.
Meanwhile, in the US, producer price data will be released late Tuesday and consumer data the next day, providing clues as to whether the Fed has the ability to cut interest rates later in the year or whether cut expectations will be pushed to 2025.
Crude oil has been on a downward trend since April as the geopolitical risk premium triggered by tensions in the Middle East has largely evaporated. Still, prices have remained high since the start of the year as OPEC and its allies restrict flows, and the group is generally expected to extend restrictions into the second half.
“We think OPEC+ will likely keep current production plans unchanged, thus cementing voluntary supply cuts,” said Vivek Dhar, an analyst at Commonwealth Bank of Australia. Dhar said that in this environment and in an environment where developed economies are expected to reduce interest rates, Brent will average $80 per barrel in the third quarter and $85 in the last three months.