U.S. crude oil gains nearly 3% as market looks to OPEC+ meeting on production levels

U.S. crude oil gained nearly 3% on Tuesday after booking a loss last week as the market focuses on an upcoming key OPEC+ meeting.

OPEC+ will hold a virtual meeting on Sunday to review its production policy. Several OPEC+ members are voluntarily holding 2.2 million barrels per day off the market to support prices.

Deutsche Bank analyst Michael Hsueh said OPEC+ countries are unlikely to raise production given that the current price of Brent is closer to $80 per barrel than $90 per barrel.

Tamas Varga, analyst with oil broker PVM, said he expects “no changes in production will be forthcoming” because the meeting is virtual.

Here are Tuesday’s closing energy prices:

• West Texas Intermediate July contract: $79.83 a barrel, up $2.11, or 2.71%. Year to date, U.S. crude oil has gained 11.4%.
• Brent July contract: $84.22 a barrel, up $1.12, or 1.35%. Year to date, the global benchmark has gained 9.3%.
• RBOB Gasoline June contract: $2.50 per gallon, up 1%. Year to date, gasoline futures are up 19.3%.
• Natural Gas June contract: $2.59 per thousand cubic feet, up 2.78%. Year to date, gas is up 3%.

Deutsche Bank has maintained its current Brent forecast of $83 per barrel for the second quarter and $88 in the second half of the year, assuming OPEC+ will maintain its production policy on Sunday.

But pressure will grow on the group after the June meeting to raise output, which could push Brent prices below $80 a barrel, according to Hsueh.

Saudi Arabia understands that maintaining a target price for oil significantly above a breakeven price of $75 per barrel for the broad U.S. oil sector is unsustainable in the long term, Hsueh said. And the stabilization of U.S. production since September has given OPEC some room to maneuver, he said.