Oil surges on Tuesday

Oil saw its largest surge on Tuesday since March, ahead of an impending OPEC+ report offering market insights, as per a Bloomberg report.

Brent hovered below $82 per barrel following a 2.5 per cent spike on Monday, while West Texas Intermediate (WTI) lingered near $78.

Traders seized on Monday’s rally, coined as “buying the dip,” rebounding from the steepest weekly loss since early May, prompted by OPEC+’s decision to reintroduce some supply this year. The market turbulence led the group to clarify its readiness to halt or reverse production adjustments if necessary.

Since early April, oil has trended downwards, spurred by demand worries and burgeoning supply from non-OPEC sources. Despite Russia’s commitment to OPEC+ production cuts, its output in the previous month exceeded agreed levels. Nevertheless, bullish signals persist, exemplified by Brent’s three-month spread at $1.40 per barrel in backwardation, indicating tight supply.

Market sentiment remains attuned to the Federal Reserve‘s forthcoming interest-rate decision, scheduled for Wednesday. Despite a resilient US economy and persistent inflation, investors have tempered expectations of an imminent policy shift, bolstering the dollar and exerting downward pressure on oil prices.

Traders are optimistic about summer demand prospects, seeking solace amidst prevailing uncertainties.