Oil Advances With OPEC+ Meeting and US Fuel Demand in Focus

Oil rose after dropping last week, with the focus on an OPEC+ supply meeting on Sunday and US demand at the start of the summer driving season.

Brent futures rose above $83 a barrel after dropping 2.2% last week and touching the lowest since early February. West Texas Intermediate

advanced above $78. The Organization of the Petroleum Exporting Countries and its allies will hold a policy meeting online, and are widely expected to prolong production cuts into the second half of 2024.

Prices were also supported by concern that Israel’s war in Gaza may expand to the broader region, threatening oil supplies, after an Egyptian soldier was killed in a clash with Israeli forces at the Rafah border crossing.

Activity was muted with a holiday in the UK and the US, where the Memorial Day weekend kicks off the summer driving season, which will provide clues on demand trends. Early signs have pointed to a solid showing, with expectations that the number of people to fly over the weekend will be the highest in nearly 20 years, according to the American Automobile Association.

“We saw a very strong demand from the US last week ahead of the Memorial day long weekend,” said Giovanni Staunovo, a commodity strategist at UBS Group AG. “Record flight activity and strong gasoline demand should give some support to oil prices.”

Brent is up almost 8% this year, supported by persistent geopolitical risks and OPEC+’s roughly 2 million barrels a day of output cuts. Egypt’s military confirmed a border guard died on Monday, and the Israel Defense Forces said “a shooting incident occurred on the Egyptian border,” without giving any more detail.