Energy
Tuesday, May 28th, 2024 3:21 pm EDT
Key Points
- U.S. crude oil prices rose by over 1% on Tuesday as the market anticipates the upcoming OPEC+ meeting, where production policy will be reviewed. Several OPEC+ members are currently withholding 2.2 million barrels per day to support prices.
- Analysts from Deutsche Bank and PVM expect no changes in OPEC+ production policy, with current Brent crude prices closer to $80 per barrel. The virtual nature of the meeting is also cited as a reason for likely maintaining the status quo.
- Deutsche Bank forecasts Brent prices at $83 per barrel for Q2 and $88 for the second half of the year. However, there may be pressure to increase output after June, potentially pushing prices below $80 per barrel. Saudi Arabia’s awareness of the unsustainable high target prices above the U.S. oil sector’s $75 breakeven point and U.S. production stabilization provide OPEC with flexibility.
On Tuesday, U.S. crude oil prices increased by over 1% following last week’s decline as the market anticipates a key upcoming OPEC+ meeting. The meeting, scheduled for Sunday, will be held virtually to review the group’s production policy. Currently, several OPEC+ members are voluntarily withholding 2.2 million barrels per day from the market to support prices. Deutsche Bank analyst Michael Hsueh predicts that OPEC+ is unlikely to increase production because the current Brent crude price is closer to $80 per barrel rather than $90. Similarly, Tamas Varga, an analyst with oil broker PVM, expects no changes in production due to the virtual format of the meeting.
As of today’s energy prices, the July contract for West Texas Intermediate crude rose by $1.12, or 1.44%, to $78.84 per barrel, marking a 10% gain year to date. The Brent crude July contract increased by 9 cents, or 0.11%, to $83.19 per barrel, with an 8% gain year to date. The June contract for RBOB gasoline rose by 0.85% to $2.50 per gallon, up 19% year to date. Meanwhile, natural gas for June decreased by 0.16% to $2.51 per thousand cubic feet, remaining relatively unchanged year to date.
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+ maintains its current production policy. However, Hsueh notes that pressure will likely mount on the group to increase output after the June meeting, potentially pushing Brent prices below $80 per barrel. He adds that Saudi Arabia recognizes that sustaining a target price significantly above the U.S. oil sector’s breakeven price of $75 per barrel is unsustainable in the long run. The stabilization of U.S. production since September has provided OPEC with some flexibility in their decisions.
For the full original article on CNBC, please click here: https://www.cnbc.com/2024/05/28/crude-oil-prices-today.html
