Key points:

  • There is stability in oil prices as demand is expected to be high in the summer season.
  • Analysts predict that OPEC+ countries will maintain oil production restrictions at 2.2 million barrels per day.
  • At the beginning of the week, trading is limited due to holidays in the UK and US on May 27th.

World oil prices have demonstrated stability. The likelihood that OPEC+ member countries will decide to maintain oil production restrictions at a June 2 meeting counteracted the decline in prices. At the same time, concerns about rising interest rates in the US are having a restraining effect on asset growth.

Interest rates likely to weigh on oil

Oil prices rose more than 1% on Monday, May 27, in subdued trading due to public holidays in the UK and US. Prices were supported by expectations of high demand for fuel due to the start of the summer driving season and the holiday season in the United States.

July Brent futures rose 17 cents, or 0.2%, to $83.27 a barrel. WTI crude oil traded at $78.79, up $1.07 or 1.4% from Friday’s close. It is worth noting that trading in the United States was not held on this day due to the Memorial Day holiday.

Despite improved market sentiment over the past two days, further gains in oil prices in the near term are likely to be hampered by interest rate concerns. Expectations that US rates will remain high for an extended period led to oil ending last week with a weekly loss.

Traders expect positive dynamics after OPEC+ meeting

Domestic air travel in the U.S. is showing strong growth, with the number of seats on flights up 5% month-on-month and nearly 6% year-over-year in May to more than 90 million, according to data analytics firm OAG. This means that demand for domestic air travel in the US is already above pre-pandemic levels in 2019.

The upcoming online meeting of OPEC+ countries on Sunday, June 2 is also expected to have a positive impact on oil prices. Traders and analysts predict that alliance members will decide to maintain the current voluntary production cuts of 2.2 million barrels per day, which will help stabilize the market.

In addition, many experts are confident that oil prices will be supported by the beginning of the summer driving season in the United States, when demand for fuel traditionally increases.