Next week: Brent awaits OPEC+ meeting

• Brent ↑ 6% year to date

• Directed to highest monthly ↓ in 2024

• OPEC+ decision, EIA and NFP data in focus

• During the past year NFP movements triggered by 1% ↑ or ↓

• Technical levels – $84.50 and $81.00

Key central bank decisions and top economic data could shake up markets in the coming week:

Sunday, June 2

• OIL: OPEC+ virtual meeting

Monday, June 3

• CN50: China Caixin Manufacturing PMI
• EU50: Manufacturing PMI in Eurozone/Germany
• JPY: Capital Expenditure in Japan
• UK100: UK manufacturing PMI
• US500: ISM production

Tuesday, June 4th

• GER40: unemployment in Germany
• ZAR: GDP of South Africa
• RUS2000: US factory orders, JOLTS

Wednesday, June 5

• CN50: China Caixin PMI services
• AU200: Australia’s GDP
• EU50: Eurozone services PMI, PPI
• CAD: Canada Rate Decision
• US30: US ISM services
• OIL: EIA Weekly Report

Thursday, June 6

• AU200: Australia’s balance of trade
• EUR: ECB rate decision, retail sales
• GER40: German factory orders
• TWN: Taiwan CPI

Friday, June 7

• CNH: trade with China, foreign exchange reserves
• CAD: Unemployment in Canada
• EU50: Eurozone GDP (final), German industrial production
• TWN: Trade with Taiwan
• USDInd: May US Non-Farm Payrolls (NFP)

Oil benchmarks in focus thanks to OPEC+ decision over the weekend.

Brent is down almost 5% this month but is still rising about 6% from the beginning of 2024.

In the first quarter of 2024, oil prices were initially supported by geopolitical risks and hopes around OPEC+ supply cuts, tightening global markets. But gains were limited in Q2 uncertainty over China’s demand and rising US crude oil inventories.

Still, oil benchmarks could start the first week of June with a bang! Here are 4 reasons why:

1) OPEC+ virtual meeting.

Over the weekend, OPEC+ is expected to do so extend current production cuts – possibly by the end of this year.

Given that the cartel gives a reckoning about 40% of the total global oil supply, any decision can have an impact on oil prices.

Note: In November 2023, OPEC+ agreed to voluntarily cut production by 2.2 million barrels per day until the first quarter of 2024. In March, these were extended until the end of June 2024.

• Oil prices could respond positively if the cartel extend production cuts.

• Any surprises in the form of deeper cuts can trigger a stronger optimistic reaction.

• If OPEC+ fails to extend production cutsthis could lead to lower oil prices.

2) US Energy Information Agency (EIA) report.

With the focus on the oil markets, attention will turn to the next The EIA report published on Wednesday, June 5.

Interestingly, crude oil stocks fell by 4.2 million barrels in the week ending May 24. However, US oil stocks rose from last quarter of 2023.

• A drop in US crude inventories could fuel optimism about demand, pushing global goods higher as a result.

• The price of oil could fall whether a rise in US crude inventories affects the demand outlook.

Fun fact: Over the past year, the US EIA report has triggered upward moves of up to 0.9% or declines of 1.3% in the 6 hours after release.

3) US Non-Farm Payrolls May (NFP)

The US economy is expected to have created 180,000 jobs in Maywhile the unemployment rate remains constant at 3.9%.

Given how the NFP directly influences interest rate expectations, could influence the price of oil.

Note: Lower interest rates could boost economic growth, translating into increased demand for oil. This can also weaken the dollar – supporting oil that is priced in dollars.

• A solid jobs report supporting the case for “higher rates for longer” could send the oil down.

• The oil may sputter if a disappointing report weakens the dollar and fuels rate cut bets.

Fun fact: Over the past 12 months, the US jobs report has triggered positive moves of up to 1% or declines of 1% in the 6 hours after the release.

4) Technical forces

Brent is caught in a range on the daily charts with support at $81.00 and resistance at $84.50. However, prices are trading below 50, 100 and 200 day SMA while MACD is trading below zero.

• A solid breakdown below $81.00 can open a path to $80.00 and $77.50.

• If prices push back 100 day SMAthis could open a path to $84.50. and the 50-day SMA.

Note: Oil prices may be influenced by US PCE data due later today.