Oil trades sideways ahead of OPEC+ meeting

Oil prices are trading sideways after two days of gains despite rising tensions in the Middle East following the death of an Egyptian soldier in clashes with Israeli troops. The global benchmark Brent crude has held around $83 a barrel, while U.S. crude has edged toward $79. The Egyptian military confirmed on Monday that a border guard had been killed at the Rafah crossing into Gaza, a move that could escalate tensions with Israel. Oil has been rising this year because of ongoing geopolitical risks and the OPEC+ group’s production cut of around 2 million bpd, which it is expected to extend through the second half of 2024 at a meeting on Sunday. Prices have fallen since early April as demand from Asia has weakened. “A combination of factors suggests there is some upside sentiment in oil, from the worrisome geopolitical situation to the depletion of inventories and OPEC’s default preference to maintain restrictions,” said Vishnu Varathan, former chief Asia economist at Mizuho Bank Japan. The death of an Egyptian soldier on Sunday, following Israeli airstrikes on a displaced people camp that have been condemned by governments around the world, poses an additional risk to oil markets. There have been no major disruptions to crude flows from the Middle East, which accounts for about a third of global production, although Houthi attacks in the Red Sea have redirected some supply. Investors will also be looking for signs of U.S. fuel demand data after the Memorial Day holiday, which traditionally marks the start of the busiest summer driving season.