Crude rebounds from three-month lows, Brent above $82/b

Quantum Commodity Intelligence – Crude oil futures were slightly higher on Friday despite testing new three-month lows as fears over the US economy gripped markets.

First month Jul24 ICE Brent futures were trading at $82.10/b (1620 GMT), compared to the day’s low of $80.65/b and Thursday’s high of $81.36/b.

At the same time Jul24 NYMEX WTI trade at $77.68/bfrom Thursday’s settlement of $76.87/b.

Oil markets were already struggling after comments from Federal Reserve officials earlier in the week, while minutes from the latest FOMC meeting cast further doubt on interest rate cuts.

“Participants noted that they continued to expect inflation to return to 2% over the medium term, but disinflation is likely to take longer than previously thought,” the meeting notes revealed.

A rate cut now looks increasingly unlikely until at least September, with hopes of multiple cuts in borrowing rates this year fading fast.

“Short-term sentiment eased after minutes from the Fed’s latest policy meeting showed that policymakers’ hopes of further reducing inflationary pressures were partially offset by indications that the first rate cut could be delayed further, with signals that the possibility of another rate hike is not completely off the table, adding to the overall driver message,” said Slobodan Drvenica of Windsor Brokers.

Attention has also shifted to the OPEC+ meeting in early June, where producers will discuss whether to extend their output cut by 2.2 million bpd.

The decision to hold the meeting online was seen as an indication that the group will maintain its current production policy, with lower prices this month all but ending the likelihood of producers starting to cut back.

“Oil price weakness gives OPEC+ no choice but to cut further,” Qamar Energy CEO Robin Mills told the Gulf Intelligence energy markets podcast on Friday.