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Oil Advances With OPEC+ Meeting and US Fuel Demand in Focus

(Bloomberg) -- Oil rose after dropping last week, with the focus on an OPEC+ supply meeting on Sunday and US demand at the start of the summer driving season.

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Brent futures rose above $83 a barrel after dropping 2.2% last week and touching the lowest since early February. West Texas Intermediate advanced above $78. The Organization of the Petroleum Exporting Countries and its allies will hold a policy meeting online, and are widely expected to prolong production cuts into the second half of 2024.

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Prices were also supported by concern that Israel’s war in Gaza may expand to the broader region, threatening oil supplies, after an Egyptian soldier was killed in a clash with Israeli forces at the Rafah border crossing.

Activity was muted with a holiday in the UK and the US, where the Memorial Day weekend kicks off the summer driving season, which will provide clues on demand trends. Early signs have pointed to a solid showing, with expectations that the number of people to fly over the weekend will be the highest in nearly 20 years, according to the American Automobile Association.

“We saw a very strong demand from the US last week ahead of the Memorial day long weekend,” said Giovanni Staunovo, a commodity strategist at UBS Group AG. “Record flight activity and strong gasoline demand should give some support to oil prices.”

Brent is up almost 8% this year, supported by persistent geopolitical risks and OPEC+’s roughly 2 million barrels a day of output cuts. Egypt’s military confirmed a border guard died on Monday, and the Israel Defense Forces said “a shooting incident occurred on the Egyptian border,” without giving any more detail.

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