CRANBURY, N.J. (DTN) -- Oil futures nearest delivery on the New York Mercantile Exchange are rallying in early trading on the first day of June, while the Brent contract on the Intercontinental Exchange traded at $71 per barrel (bbl), as manufacturing data for the eurozone and China showed strong growth continued in May that is seen supporting global fuel demand ahead of Tuesday's meeting by the Organization of the Petroleum Exporting Countries, Russia and several additional oil producing countries.
Brent crude in its second session with August futures as the nearby contract rallied to $71 bbl, the highest trade on the spot continuous chart since early March, with the international crude benchmark advancing on strong economic signals from the eurozone, where the collective economy's purchasing manager's index for manufacturing unexpectedly ticked higher to 63.1 in May, with factory growth at a record high. Germany's manufacturing PMI slowed from April's torrid pace at 66.2 to 64.4 in May which was more than expected while advancing to a better than estimated 59.4 in France.
Strong manufacturing activity in the United States is also expected to be detailed in data to be released later this morning, with the U.S. manufacturing PMI due out at 9:45 a.m. ET expected to have increased one point to 61.5 in May, while the Institute of Supply Management's Manufacturing Index to be released at 10 a.m. ET is expected to have increased to 60.9 in May after slight slowdown in April.
Manufacturing activity in China ticked up to 52 in May, the fastest growth rate in 2021, while in India the manufacturing PMI fell a more than expected 4.7 to 50.8, reflecting the spike in COVID-19 cases and deaths that has hammered the 1.4 billion person economy. Increased cases of COVID-19 in Asia has dulled fuel demand, especially in India, which has capped the upside in oil prices.
Tuesday morning's rally comes as country officials for OPEC+ are scheduled to meet for the 17th time Tuesday by video conference, with the market largely expecting no change in crude production policy from their April 1 agreement. Those terms provided for a 500,000 barrel re day (bpd) increase in crude production by OPEC+ in May followed by a 350,000 bpd boost this month and 441,000 bpd output hike in July, as OPEC+ reduces the amount of crude oil production it keeps off the market. OPEC+ will still keep 5.759 million bpd of crude oil production off the market per the agreement among members.
In early trading, July West Texas Intermediate futures surged to a 31-month high on the spot continuous chart at $68.42 bbl, trading up $2 and near the high at $68.30 bbl at last look. ICE August Brent crude futures were up about $1.60 near $70.90 bbl. July ULSD futures were more than 6 cents higher at $2.10 gallon, trading near a $2.1005 17-month high on the spot continuous chart, with July RBOB futures holding below May's $2.2170 high, trading nearly 5 cents higher at $2.1850 gallon.
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