(Bloomberg) — Oil hovered near the lowest in three months as traders weighed decreased geopolitical risks and signs that global markets are sufficiently supplied ahead of next month’s OPEC+ meeting.
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Global benchmark Brent crude’s prompt spread narrowed to 24 cents, closely approaching a bearish contango structure that signals ample supplies in the near future. While both Brent and West Texas Intermediate futures edged higher Friday, they’re set for weekly declines and are near their lowest prices since February.
Bearish sentiment has permeated the market after a “pricing out of the geopolitical premium and growing concern on the supply and demand balance,” said Arne Lohmann Rasmussen, head of research at A/S Global Risk Management.
Traders will be seeking further visibility into fuel demand in the days ahead as the Memorial Day holiday weekend kicks off the start of the peak driving period in the US.
Brent is still up about 6% up this year in part due to OPEC+’s 2 million barrels a day of production cuts as well as persistent geopolitical risks. Still, oil has fallen since mid-April as the conflict in the Middle East has yet to disrupt crude supplies.
The OPEC+ alliance meets on June 2, a day later than initially planned, and is widely expected to prolong output cuts into the second half of 2024. Its decision to hold the meeting online supports the expectation that cuts will continue, according to Viktor Katona, head crude analyst at market intelligence firm Kpler Ltd.
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