By Laila Kearney
NEW YORK (Reuters) -Oil prices rose more than $1 a barrel on Tuesday on expectations that OPEC+ will rein in crude supply at its June 2 meeting, while the start of the U.S. summer season and a weaker dollar hurt the commodity also gave an impetus.
futures for July delivery rose $1.12, or 1.4%, to $84.22 a barrel. ended at $79.83 a barrel, gaining $2.11, or 2.7% from Friday’s close, after trading during Monday’s Memorial Day U.S. holiday without a settlement.
Ahead of next Sunday’s online meeting of OPEC+ oil producers, traders and analysts predict voluntary production cuts of 2.2 million barrels per day will remain in place.
“We expect OPEC+ to extend the current cut for at least another three months at the upcoming meeting,” UBS analysts said in a note.
“This week’s upward continuation is fueled by significant weakening in the dollar and a growing consensus that OPEC+ will extend production cuts at the upcoming weekend meeting,” said Jim Ritterbusch of Ritterbusch and Associates.
The dollar fell 0.1% to the lowest in more than a week. [USD/]
Oil showed a trading gain of more than 1% on Monday, which was muted due to the holiday, with hopes of a demand boost from the first trading day since the start of the US summer and holiday season providing support.
Concerns about US interest rates remaining high for an extended period contributed to a weekly loss for crude oil last week. Higher interest rates increase borrowing costs, which can dampen economic activity and oil demand.
Investors will pay attention to the U.S. personal consumption expenditures (PCE) price index, a key inflation gauge for the Federal Reserve, which will be released on Friday.
“Despite the undeniably more positive mood over the past two days, interest rate concerns are very likely to hold back further attempts to send oil prices significantly higher in the near future,” said Tamas Varga of broker PVM.
Air travel data also helped boost oil prices, with the number of U.S. seats on domestic flights rising 5% month-on-month and nearly 6% year-over-year to just above 90 million in May, data from flight analytics company OAG, surpassing 2019 levels. .
The ongoing conflict in the Middle East, including the death of an Egyptian security service member in a firefight with Israeli forces on Monday, has also contributed to a rise in oil prices, said Bob Yawger of Mizuho Bank.
