Top Stories
Oil set for weekly loss ahead of OPEC+ meeting
Global Banking and Finance Review
Company
By Nicole Jao
NEW YORK (Reuters) -Oil prices fell on Friday and were set for 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 32 cents, or 0.4%, to $81.54 a barrel by 11:53 a.m. EDT (1553 GMT), while the more liquid August contract was down 99 cents, or 1.2%, at $80.89. U.S. West Texas Intermediate (WTI) crude futures fell $1.11, or 1.4%, at $76.8.
Brent is on track for a weekly decline of 0.7%, with WTI on course for a 1.2% 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, three sources familiar with OPEC+ discussions told Reuters.
“OPEC+ is likely to stay in pre-emptive market management mode to keep contango away and prevent oil prices from spiralling to higher levels,” said Mukesh Sahdev, an analyst at Rystad Energy.
U.S. crude production rose in March to its highest level this year, data from the U.S. Energy Information Administration (EIA) showed on Friday, while fuel product supplied, a proxy for demand, fell 0.4% to 19.9 million barrels per day.
The oil market has been under pressure in recent weeks over the prospect of borrowing costs staying higher for longer, which ties down funds and can curb oil demand.
Both oil benchmarks were on course for their worst monthly declines since December after dropping in the previous session on a surprise build in U.S. fuel inventories.
“U.S. 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 U.S. government data on Friday showed U.S. inflation tracked sideways in April, strengthening traders’ bets that the Fed would likely deliver a long-awaited rate cut in September.
Euro zone 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 or halt the rate cutting cycle in the coming months.
(Reporting by Nicole Jao in New York, Robert Harvey in London, Deep Vakil in Bengaluru, Georgina McCartney in Houston and Colleen Howe in Beijing; additional reporting by Natalie Grover; editing by David Goodman, Nick Macfie and Paul Simao)
OPEC, or the Organization of the Petroleum Exporting Countries, is a group of oil-producing nations that coordinates and unifies petroleum policies among its member countries to ensure stable oil prices and a regular supply of oil to consumers.
West Texas Intermediate (WTI) is a grade of crude oil used as a benchmark in oil pricing. It is known for its light and sweet characteristics, making it ideal for refining into gasoline and other products.
Contango is a market condition where the futures price of a commodity is higher than the expected spot price at maturity. This often occurs when there are high storage costs or expectations of rising prices.
Output cuts refer to a reduction in the production levels of oil by OPEC or other oil-producing nations to stabilize or increase oil prices in response to market conditions.
Inflation is the rate at which the general level of prices for goods and services rises, eroding purchasing power. Central banks attempt to limit inflation to keep the economy running smoothly.
Explore more articles in the Top Stories category
