U.S. crude oil gains more than 1% as market looks to OPEC+ meeting on production levels

The sun sets behind a pumpjack during a gusty night in Fort Stockton, Texas, March 24, 2024.
Brandon Bell | Getty Images

U.S. crude oil gained more than 1% on Tuesday after booking a loss last week as the market focuses on a key OPEC+ meeting this weekend.

OPEC+ will hold a virtual meeting on Sunday to review its production policy. A coalition of OPEC+ members are voluntarily holding 2.2 million barrels per day off the market to support prices.

Deutsche Bank analyst Michael Hsueh said OPEC+ countries are unlikely to raise production given that the current price of Brent is closer to $80 per barrel than $90 per barrel.

Tamas Varga, analyst with oil broker PVM, said the fact that the meeting is virtual indicates “that no changes in production will be forthcoming.”

Here are today’s energy prices:

  • West Texas Intermediate July contract: $78.84 a barrel, up $1.12, or 1.44%. Year to date, U.S. crude oil has gained 10%.
  • Brent July contract: $83.19 a barrel, up 9 cents, or 0.11%. Year to date, the global benchmark has gained 8%.
  • RBOB Gasoline June contract: $2.50 per gallon, up 0.85%. Year to date, gasoline futures are up 19%.
  • Natural Gas June contract: $2.51 per thousand cubic feet, down 0.16%. Year to date, gas is little changed.

Deutsche Bank has maintained its current Brent forecast of $83 per barrel for the second quarter and $88 in the second half of the year, assuming OPEC+ will maintain its production policy on Sunday.

But pressure will grow on the group after the June meeting to raise output which would could push Brent prices down below $80 a barrel, according to Hsueh.

Saudi Arabia understands maintaining a target price for oil significantly above a breakeven price of $75 per barrel for the broad U.S. oil sector is unsustainable longer term, Hsueh said. And the stabilization of U.S. production since September has given OPEC some room to maneuver, he said.

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