At the beginning of the Asian session on Wednesday (May 29), international oil prices fluctuated in a narrow range and maintained overnight gains. U.S. crude oil is currently trading around $80.20 per barrel. Oil prices rose more than $1 on Tuesday, and the market expects that the Organization of Petroleum Exporting Countries (OPEC) and the OPEC+ oil producer coalition formed by its allies, including Russia, will continue to limit crude oil supply at the June 2 meeting. At the same time, the beginning of the US summer driving season and the weakening dollar also boosted commodities.

Brent crude oil futures for July delivery closed up $1.12, or 1.4%, and settled at $84.22 per barrel. U.S. crude oil futures settled at $79.83 per barrel, up $2.11 or 2.7% from the close of Friday. Monday is the US Veterans Day holiday, and there is no settlement for U.S. crude oil.

Traders and analysts predict that the OPEC+ online conference to be held on Sunday (June 2) will announce that voluntary production cuts of 2.2 million b/d will remain unchanged.

UBS analysts said in a report, “We expect OPEC+ to extend the current production cuts for at least another three months at the upcoming meeting.”

Jim Ritterbusch of Ritterbusch and Associates said, “The dollar has weakened sharply, and it is increasingly agreed that OPEC+ will extend production cuts at the upcoming weekend meeting. These factors are driving up oil prices this week.”

The US dollar fell 0.24% intraday on Monday, hitting a one-week low of 104.33, but recovered most of its decline at the end of the session.

Oil prices fell last week due to concerns that US interest rates would remain high for a longer period of time. Higher interest rates will raise borrowing costs, thereby curbing economic activity and oil demand.

Investors will focus on Friday's US core personal consumption expenditure (PCE) price index, which is the Federal Reserve's main measure of inflation.

Air travel data is also boosting oil prices. According to data from flight analysis company OAG, the number of passengers carried on domestic flights in the US increased 5% month-on-month and nearly 6% year-on-year in May, reaching slightly higher than 90 million, exceeding the level of 2019.

The geographical situation also continues to support oil prices.

The Israeli military denied attacking a refugee camp west of Rafah on Tuesday after health authorities in Gaza said Israeli tank shelling had killed at least 21 people in the refugee camp. The UN Security Council held a closed meeting on Tuesday on the latest developments in Rafah. The Biden administration said on Tuesday that it is closely monitoring the investigation into Sunday's air strikes. White House spokesman Kirby said that the events on Sunday and Tuesday will not prompt the US to stop military aid to Israel.

The Kranian Armed Forces General Staff said that on the evening of May 28, the Russian army intensified its attacks on almost the entire front line, and the number of engagements rose to 108. As of now, fighting is still ongoing in 18 regions.

The Chief of Staff of the Armed Forces of Ukraine said, “The most tense situation is still in the Pokrovsk direction. The Ukrainian Defense Forces are blocking the attack and are fighting back decisively against the Russian army.”

According to reports, in the Kharkiv region, Russian forces have attacked Ukrainian positions six times since the beginning of the day. Two surprise operations are being carried out in the Vovchansk region.

It should be reminded that Saudi Arabia may lower the official sales price of its flagship crude oil sold to Asia in July, which is biased to drag down oil prices.

Refining industry sources said that due to falling prices of crude oil indicators in the Middle East and profit margins of Asian refiners, Saudi Arabia, the world's largest oil exporter, may cut the prices of most crude oil categories sold to Asia in July. This will be the first drop in five months.

According to a Reuters survey of five refineries, the official sales price (OSP) of the flagship product Arabian Light Crude Oil in July is expected to drop by 0.3 to 0.5 US dollars per barrel, while the June price hit a five-month high.

Crude oil sold to Asia accounts for 82% of Saudi oil exports, and the price reduction may highlight the pressure faced by Organization of Petroleum Exporting Countries (OPEC) oil producers as supply from non-OPEC countries continues to grow while the global economy faces resistance.

Sources said that after PEMEX and Abu Dhabi National Oil Company (ADNOC) reduced domestic oil supply, the supply tension caused by sharp declines in exports from Mexico and Abu Dhabi eased.

Additionally, Canada has begun exporting heavy oil to Asia from its newly expanded cross-mountain pipeline.

One of the sources said that as supply constraints ease, the OSP for Arabian intermediate oil and heavy oil should be further reduced.

(Continuous daily chart of U.S. crude oil, source: Easy Huitong)

It is worth mentioning that the closing price of US crude oil was reported at 80.28 US dollars/barrel, which is already above the 200-day EMA at a key position of 79.91. On the technical side, this increases the bullish signal in the future. Further resistance refers to the 55-day EMA around 81.63. Strong support below is near the 100-day EMA of 79.20.

At 08:31 Beijing time, U.S. crude oil is now reported at 80.19 US dollars/barrel.