Oil climbed alongside risk assets, with attention focusing on this weekend’s OPEC+ meeting in Vienna.
OPEC and its allies are expected to weigh disappointing Chinese economic indicators and the effects of the deal to raise the US debt ceiling as they consider output levels at this weekend’s gathering. Many market watchers project OPEC+ will keep output levels unchanged, though the group’s cuts unveiled in April surprised traders, and Saudi Arabia’s energy minister recently warned speculators to “watch out.” Crude settled above $71 on Friday, though it’s still down about 13% since mid-April.
Price support on Friday is due to “speculation as to what OPEC may do,” given the latest selloff, said Dennis Kissler, senior vice president of trading at BOK Financial Securities. “It seems crude traders are moving back into a ‘risk-on’ type approach, given that recession fears at least for now have faded away.”
Crude has been weighed down this year partly by resilient exports from Russia despite sanctions. The US labor market is sending conflicting signals, with payrolls surging along with joblessness, giving Federal Reserve officials more reason to pause interest-rate hikes.
“Oil prices are likely to fall somewhat further at the start of next week because OPEC+ is not expected to decide on any further production cuts,” analysts at Commerzbank AG, including Carsten Fritsch, said in a report. “We see the current production level as too low in any case in the medium term, so the oil price should pick up again in the coming weeks.”
- WTI for July delivery gained $1.64 to settle at $71.74 a barrel in New York.
- Futures fell 93 cents this week
- Brent for August settlement rose $1.85 to settle at $76.13 a barrel.
-With assistance from Verity Ratcliffe.