Oil prices increased in Asian trading on Wednesday, driven by expectations that major producers will sustain output cuts in an upcoming meeting on Sunday, and by the anticipated rise in fuel consumption as the peak summer demand season begins.

By 0630 GMT, Brent crude futures for July delivery had gained 18 cents, or 0.2%, reaching $84.40 a barrel. U.S. West Texas Intermediate futures for July rose by 28 cents, or 0.3%, to $80.11. Both benchmarks had increased by more than 1% the previous day.

Traders and analysts predict that the Organization of the Petroleum Exporting Countries and its allies, including Russia—collectively known as OPEC+—will maintain voluntary production cuts amounting to approximately 2.2 million barrels per day.

Sugandha Sachdeva, founder of Delhi-based research firm SS WealthStreet, noted that the anticipation of OPEC+ members extending their output cuts has generated optimism in the markets. This move is perceived as a concerted effort to stabilize prices and rebalance the global oil market.

“Additionally, the beginning of the summer driving season in the U.S. typically triggers a seasonal increase in consumption, which usually supports a positive momentum in crude oil prices,” she added.

The Memorial Day holiday on Monday marked the start of the peak demand season in the U.S., the world’s largest oil consumer. Maintaining production cuts is expected to support prices as consumption increases.

“Preliminary data suggest a relatively high number of U.S. holiday trips were taken over the Memorial Day holiday, the traditional start of the driving season. Air travel has also been strong,” noted Daniel Hynes, senior commodity strategist at ANZ Bank, in a note.

Rising tensions in the Gaza Strip, with Israeli tanks advancing into the Rafah area, also supported prices due to concerns about the conflict potentially widening in the Middle East, a crucial supply region.

Investors are also awaiting U.S. crude inventory data from the American Petroleum Institute, which was delayed by a day due to the Memorial Day holiday. A preliminary Reuters poll on Tuesday indicated that U.S. crude oil stockpiles were expected to have decreased by about 1.9 million barrels last week.

Additionally, investors are looking ahead to U.S. inflation data this week, which could influence expectations for Federal Reserve interest rate cuts and affect oil prices. The U.S. core Personal Consumption Expenditures Price Index report for April, due on Friday, is the Fed’s preferred inflation gauge and is expected to remain steady on a monthly basis.

Expectations for the timing of rate cuts have fluctuated, as policymakers remain cautious amid persistent inflation data.

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