OPEC+ likely to stand pat

It was a week of two halves, with prices initially falling before the passage of the US debt ceiling bill and a strong US May employment report saw prices recoup some of those losses later in the week. Attention is now turning towards the OPEC+ meeting in Vienna this weekend. Looking through the usual plethora of conflicting signals ahead of the meeting, we think that the most likely outcome is for production policy to be left unchanged. After all, it is not clear that Russia is complying with earlier cuts and other OPEC+ members have expressed concern about losing market share.

Otherwise, next week is fairly quiet on the data front, with one notable exception. China will publish its May trade data on Wednesday. So far this year, it has been a bit of a mixed picture for China’s commodity imports. Copper imports have been weak, while oil imports rose by a relatively modest 4.6% y/y in January-April despite signs of strong growth in demand. We suspect that crude stocks accumulated during the pandemic are being drawn down, which is likely to keep a lid on oil imports for some time yet.