Oil rose alongside risk assets, with attention focused 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 U.S. debt ceiling as they consider production levels at this weekend’s meeting. Many market watchers project that OPEC+ will keep production levels unchanged, although the group’s April cuts surprised traders and Saudi Arabia’s energy minister recently warned speculators that “live carefully”. Crude settled above $71 on Friday, although it is still down 13% since mid-April.
Price support on Friday is due to “speculation about what OPEC may do” given the latest selloff, said Dennis Kissler, senior vice president of trading at BOK Financial Securities. “Crude oil traders appear to be returning to a ‘risk-on’ approach as recession fears have, at least for now, faded.”
Crude oil has been hurt this year in part by Russia’s resilient exports despite sanctions. The US labor market is sending mixed signals, with payrolls rising alongside unemployment, giving Federal Reserve officials more reason to hold off on interest rate hikes.
“Oil prices are likely to fall slightly further early next week as OPEC+ is not expected to decide on any further production cuts,” Commerzbank AG analysts, including Carsten Fritsch, said in a report “We see the current production level as too low in any case in the medium term, so oil prices should pick up again in the coming weeks.”
Prices:
- 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 the assistance of Verity Ratcliffe.
