Oil prices rise on demand hopes, OPEC+ meeting awaited

Investing.com-- Oil prices rose in Asian trade on Wednesday, extending recent gains on hopes that demand will pick up with the onset of the travel-heavy U.S. summer season.

Traders also bet that the Organization of Petroleum Exporting Countries will keep ongoing production cuts in place during a meeting over the weekend. 

Brent oil futures expiring in July rose 0.3% to $84.51 a barrel, while West Texas Intermediate crude futures rose 0.5% to $80.19 a barrel by 20:52 ET (00:52 GMT).

In addition to demand hopes, renewed geopolitical unrest in the Middle East also factored into some strength in crude. Israel was seen pushing further into Rafah, ramping up tensions over a bigger conflict in the oil-rich region. 

US fuel demand set to increase in coming months

Oil markets were chiefly boosted by growing optimism over the U.S. summer season, which usually marks at least two months of elevated demand in the world’s biggest fuel consumer. 

Upcoming inventory data is expected to further this notion, with analysts predicting a 2 million barrel draw in overall inventories. 

Still, optimism over the U.S. was held back by repeated warnings from the Federal Reserve that interest rates will potentially stay high for longer, amid sticky inflation. 

This boosted the dollar, limiting any major upside in crude. 

Focus this week is on key U.S. PCE price index data, which is the Fed’s preferred inflation gauge. A string of Fed officials are set to speak, while a revised reading on first quarter gross domestic product is also on tap. 

OPEC+ expected to keep supply cuts in place 

Oil markets were also anticipating an upcoming meeting of the Organization of Petroleum Exporting Countries and allies (OPEC+), which is set to take place online on June 2. 

The cartel is widely expected to maintain its current pace of production cuts, at 2.2 million barrels per day, past an end-June deadline, heralding tighter oil markets in the coming months.

The OPEC+, led by Saudi Arabia and Russia, had slashed production over the past two years to support oil prices. But this had presented only limited gains to crude.