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Oil advances towards $70 as OPEC prepares to set output
As OPEC+ holds its monthly meeting on Tuesday to discuss production policy, the key question for the market is whether the group goes ahead with the planned output increase over June and July. Photo illustration: Reuters.

US petrol demand jumps 9.6% above the average of the previous four Sundays, the highest weekend demand since the summer of 2019

(AF) Oil prices rose towards the $70 a barrel mark on Tuesday ahead of an OPEC+ meeting as the US prepared to return to work after the Memorial Day weekend, the ceremonial start of summer when Americans begin to drive more.

Brent crude futures for August gained 56 cents, or 0.8%, to $69.88 a barrel. West Texas Intermediate, the US benchmark, was at $67.33 a barrel, up $1.01, or 1.5% from Friday’s close.

GasBuddy, a price tracker, said Sunday’s US petrol demand jumped 9.6% above the average of the previous four Sundays, the highest Sunday demand since the summer of 2019.

The Organization of the Petroleum Exporting Countries and allies (OPEC+) is likely to gradually ease oil supply curbs at a meeting on Tuesday. OPEC+ decided in April to return 2.1 million barrels per day (bpd) of supply to the market from May to July.

“There are many moving parts when it comes to factors affecting the global oil market, such as the pace of change during the pandemic,” Mohammad Sanusi Barkindo, OPEC secretary-general, said.

Analysts were upbeat about crude’s prospects. “Oil prices appear well supported, with Brent still in striking distance of the $70 level,” Warren Patterson, head of commodities strategy at ING, said.

MARKET FOCUSED

“While there are concerns over tighter Covid-19 related restrictions across parts of Asia, the market appears to be more focused on the positive demand story from the US and parts of Europe,” he added.

As OPEC+ holds its monthly meeting on Tuesday to discuss production policy, the key question for the market is whether the group goes ahead with the planned output increase over June and July, Patterson said.

“The market will also be looking for any hints from the group on what they may do with supply after July,” he said.

The return of sanctions-hit Iran to global markets is also expected to be discussed at the meeting.

“We anticipate that the expected return of Iranian production and exports to the global market will occur in an orderly and transparent fashion, thereby maintaining the relative stability that we have worked hard to achieve,” Barkindo said.

With reporting by Reuters

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George Russell

George Russell is a freelance writer and editor based in Hong Kong who has lived in Asia since 1996. His work has been published in the Financial Times, The Wall Street Journal, Bloomberg, New York Post, Variety, Forbes and the South China Morning Post.

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