In European morning trading on Monday, crude oil futures saw a slight uptick as markets sought fresh direction following losses from the previous week and a sluggish performance throughout May.
The front-month Jul24 ICE Brent futures were trading at $82.41/b (0900 GMT), up from Friday’s settle of $82.12/b, while the Aug24 contract stood at $82.17/b.
Simultaneously, the Jul24 NYMEX WTI traded at $78.04/b, compared to Friday’s settle of $77.72/b, amidst subdued activity due to US and UK holidays impacting benchmark trading.
US Memorial Day typically heralds the onset of the driving season and the subsequent rise in gasoline demand. However, the anticipated surge in driving miles has yet to significantly impact oil markets.
“Investors maintained short positions, given the potential negative effects of hawkish signals from the US central bank on demand prospects. Despite the multi-month high in US gasoline demand, oil prices have yet to see a significant positive response,” noted Slobodan Drvenica of Windsor Brokers.
Despite this, economists remain cautiously optimistic about the potential for demand growth spurred by the summer driving season. Recent EIA data showed US gasoline consumption at 9.32 million bpd, a 400,000 bpd increase over the previous week, albeit still 1.2% below the same period in 2023.
Investor focus also shifted towards the upcoming OPEC+ meeting over the weekend, where discussions will center on the extension of voluntary production cuts amounting to 2.2 million bpd.
However, with the softer price performance this month, the group finds itself with limited flexibility, making a rollover widely anticipated for at least another quarter.
Sentiment regarding the European economy has shown slight improvement following lackluster growth in 2023, with hopes now pinned on potential interest rate cuts.
“In the eurozone, the ECB continues to signal a clear intention to implement a 25bp rate cut at the meeting on June 6, but subsequent actions remain uncertain,” stated Danske Bank in its latest research note.
“European growth has evidently rebounded in 2024, with even the manufacturing sector, which was hard-hit, now showing signs of easing headwinds,” the note added.
