Brent moves lower on demand concerns and ceasefire talks

The front-month ICE Brent contract shed $0.38/bbl on the day, to trade at $83.80/bbl at 09.00 GMT.

PHOTO: Oil barrels. Getty Images

Upward pressure:

Brent futures gained some support on the possibility of OPEC+ extending the ongoing 2.2 million b/d output cut agreement beyond June. The coalition might keep the voluntary cuts in place in the third quarter of this year if demand for crude continues to decline, Reuters cited three sources familiar with the matter.

“OPEC plus could extend its voluntary production cuts beyond the second quarter and into the New Year,” Price Futures Group’s senior market analyst Phil Flynn said. “The plunge in oil might reverse if OPEC sources are correct and OPEC signals an extension of the cuts,” he added.

The oil producers' group is set to convene on 1 June to discuss output policies and supply cuts.

Downward pressure:

Brent futures dipped further as the oil market went into a wait-and-see mode about the outcomes of the latest ceasefire negotiations between Israel and Hamas taking place in Cairo, Egypt.

“Hopes of a breakthrough are riding high. Hamas said on Thursday it was sending a delegation to Egypt for further ceasefire talks, which was seen as a sign of progress,” Vanda Insights’ founder and analyst Vandana Hari said.

The anticipation of prolonged higher interest rates, along with an unexpected crude inventory build in the US, has sparked concerns about oil demand and exerted downward pressure on Brent price

Commercial crude oil inventories in the US rose by 7.27 million bbls to 461 million bbls last week - the highest level since June 2023.

By Aparupa Mazumder

Please get in touch with comments or additional info to news@engine.online