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Oil prices saw a slight increase on Monday, June 10th, driven by optimism surrounding a potential surge in fuel demand during the upcoming summer months. However, the gains were tempered by a strengthening dollar, fueled by diminishing expectations of immediate U.S. interest rate cuts.
Analyst Projections and Market Sentiment
Goldman Sachs analysts have forecasted a rise in Brent crude to $86 a barrel in the third quarter, citing robust summer transport demand as a key factor that will push the oil market into a deficit of 1.3 million barrels per day (bpd).
UBS analysts echoed this sentiment, highlighting the overly pessimistic current market positioning and anticipating significant oil inventory declines in the coming weeks.
As of 0815 GMT, Brent crude futures had gained 28 cents (0.4%) to reach $79.90 a barrel, while U.S. West Texas Intermediate crude futures had risen by 36 cents (0.5%) to $75.89.
OPEC+ Cuts and Inventory Levels
Despite recent production cuts implemented by OPEC+, oil inventories have continued to rise, including U.S. crude and gasoline stocks. This has raised concerns about oversupply in the market, particularly with the planned unwinding of some production cuts from October onwards.
The strengthening dollar, driven by the U.S. jobs data and subsequent adjustments to interest rate expectations, has added pressure to oil prices. A stronger dollar makes dollar-denominated commodities like oil more expensive for holders of other currencies.
Additionally, the euro weakened following French President Emmanuel Macron’s announcement of a snap parliamentary election, further contributing to the complex market dynamics.
Outlook
Despite these challenges, energy consultancy FGE remains optimistic about oil’s trajectory, predicting a rally with prices reaching the mid-$80s in the third quarter. The interplay between rising summer demand, OPEC+ production decisions, and the strength of the dollar will continue to shape oil prices in the near future.
