By Giulia Petroni and Joe Hoppe

Here's a look at what happened in oil markets in the week of May 20-24 and what will be in focus in the days to come.

OVERVIEW: Oil prices are on track for weekly losses, with uncertainty over monetary policy and global demand leaving the market adrift ahead of the OPEC+ meeting. Brent crude currently trades around $81.83 a barrel, while West Texas Intermediate is at around $77.45 a barrel.

MACRO: The latest U.S. Federal Reserve meeting minutes poured cold water on hopes for interest rate cuts, with officials concluding rates would be needed to kept steady for longer than previously anticipated after three months of sticky inflation.

New U.S. Personal Consumption Expenditure inflation data--the Fed's preferred measure of inflation--on May 31 will be scrutinized by the market for hints on the Fed's path to monetary policy easing.

The monthly U.S. consumer sentiment gauge worsened in May on higher inflation expectations, with Americans believing inflation will average 3.3% in the next year, up from 3.2%.

The Fed this month held interest rates at their highest level in two decades, a bearish sign for oil as higher rates typically dampen demand for the commodity and make the U.S. dollar stronger, which in turn makes oil more expensive for buyers using other currencies.

GEOPOLITICAL RISKS: The market broadly shrugged off any potential political uncertainty arising from the death of Iran's President Ebrahim Raisi in a helicopter crash on Sunday, with oil prices initially rising early in the session on Monday before tapering off.

Prices have slipped since early May, signaling that traders have significantly reduced the geopolitical risk premium in recent weeks, as oil supplies currently remain largely unaffected by the war in Gaza.

However, Israel is coming under increasing pressure over its war in Palestine. On Monday, the International Criminal Court's prosecutor said he was seeking arrest warrants for Israel Prime Minister Benjamin Netanyahu and Israeli Defense Minister Yoav Gallant, as well as for a number of Hamas leaders.

On Friday, the United Nations' International Court of Justice ordered the country to halt military operations that could lead to the partial or complete destruction of the Palestinian population in the Gazan city of Rafah. Hundreds of thousands of civilians have sought refuge in the city, along with alleged Hamas militant group units.

SUPPLY AND DEMAND: On Wednesday, the Energy Information Administration reported a surprising increase in U.S. commercial crude inventories, rising 1.8 million barrels in the week ended May 17. Analysts polled by The Wall Street Journal had predicted inventories would fall by 2 million barrels.

The U.S. Department of Energy also said this week that 1 million barrels of gasoline will be released from state-managed inventories by July 4.

WHAT'S AHEAD: Market focus is on OPEC+'s next move at its June meeting, with most analysts now expecting the cartel and its allies to extend the previously announced voluntary output cuts of 2.2 million barrels a day in an effort to prop up falling prices. According to Commerzbank Research, OPEC+ would in fact risk a further price slide by announcing a gradual phasing out of the voluntary cuts. With just over a week to go, members of the expanded production cartel have been tight-lipped so far, helping to limit price fluctuations in recent days, Commerzbank says.

The upcoming Memorial Day weekend marks the start of summer driving season in the U.S., and gasoline demand has already picked up.

"If this trend continues in the world's leading oil consumer country, it should support the medium-term recovery in oil prices that we expect," Commerzbank adds.

Write to Giulia Petroni at and Joe Hoppe at

(END) Dow Jones Newswires

05-24-24 1139ET