Oil down ahead of OPEC+ meeting, posts weekly loss
Business
Market under pressure over the prospect of US interest rates staying higher for longer
NEW YORK (Reuters/Web Desk) – Oil prices fell on Friday and posted a weekly loss as investors awaited an OPEC+ meeting on Sunday that will determine the fate of the producer group's output cuts.
Brent futures for July delivery were down 24 cents, or 0.3pc, to $81.62 a barrel, while the more liquid August contract was down 77 cents, or 0.8pc, at $81.11. US West Texas Intermediate (WTI) crude futures fell 92 cents, or 1.2pc, at $76.99.
For the week, Brent settled down 0.86pc, with WTI posted a 1.31 loss.
"It's the trepidation ahead of the OPEC meeting over the weekend," said Matt Smith, lead analyst at Kpler, referencing the potential for the group to do something unexpected. "It's widely expected that they'll roll over the cuts," he added.
Markets are awaiting the OPEC+ meeting on Sunday, with the producer group working on a complex deal that would allow it to extend some of its deep oil production cuts into 2025, sources told Reuters.
Saudi Arabia invited ministers to gather in person in Riyadh for the June meeting in a last minute change of plans, sources said on Friday. The gathering is still officially scheduled as an online meeting.
US crude production rose in March to its highest level this year, data from the US Energy Information Administration (EIA) showed on Friday, while fuel product supplied, a proxy for demand, fell 0.4pc to 19.9 million barrels per day.
The oil market has been under pressure in recent weeks over the prospect of US borrowing costs [US interest rates] staying higher for longer, which ties down funds and can curb oil demand.
Both oil benchmarks were on course for their biggest monthly declines since December after dropping in the previous session on a surprise build in US fuel inventories.
"US summer travel season kicked off with Memorial Day weekend, with initial indications showing strong driving and flying activity — but fuel use looks more muted, implying efficiency gains," Citi analysts wrote in a note.
Oil prices rose briefly after US government data showed US inflation tracked sideways in April, strengthening traders' bets that the Fed would deliver a long-awaited US rate cut in September.
Eurozone inflation rose more than expected in May, Eurostat data showed. The increase is unlikely to deter the European Central Bank from cutting borrowing costs next week, but it could slow the rate cutting cycle.
US energy firms held oil and gas rig count – an early indicator of future output – steady at 600 in the week to May 31, energy services firm Baker Hughes said in its closely followed report on Friday.
Oil rigs fell by one to 496 this week, while gas rigs rose by one to 100.
However, the total rig count fell for the third month in a row in May, dropping by 13, the most in a month since August.
Money managers raised their net long US crude futures and options positions in the week to May 28, the US Commodity Futures Trading Commission (CFTC) said on Friday.
