Oil prices rise as OPEC+ meeting draws near

Crude oil prices climbed earlier today ahead of the OPEC+ meeting on Sunday, with most analysts expecting the group to keep production cuts of some 2.2 million barrels daily in place during the second half of 2024.

Brent crude climbed above $84 per barrel earlier in the day and West Texas Intermediate added over $1 to top $80 per barrel, with analysts saying that OPEC+’s continued production control would help balance an apparently oversupplied market.

"Furthermore, the onset of the summer driving season in the U.S. spurs a seasonal uptick in consumption and typically aids a positive momentum in crude oil prices," Sugandha Sachdeva from India-based consultancy SS WealthStreet told Reuters.

The first travel numbers for Memorial Day weekend are in and they appear to be bullish for prices.

"Initial data suggest a relatively high number of U.S. holiday trips have been taken over the Memorial Day holiday, the traditional start of the driving season. Air travel has also been strong," ANZ analysts said in a note as quoted by Reuters.

Meanwhile, ING’s Warren Patterson and Ewa Manthey noted a production outage at the Buzzard field in the UK’s North Sea, as reported by operator CNOOC this week. The Buzzard field is the largest source of Forties crude that is part of the Brent crude benchmark. Its production capacity is 80,000 barrels daily.

Commenting on the OPEC+ meeting on Sunday, Patterson and Manthey wrote that “Members are expected to fully roll over their additional voluntary cuts. High expectations of a full rollover mean that OPEC+ needs to ensure it does not disappoint the market, otherwise, it risks an aggressive pullback in prices.”

Among the other factors pushing oil prices higher, the ING analysts noted the latest reports of a Houthi attack on a ship in the Red Sea and the Israel-Hamas war.