Oil futures rose Friday, but remained on track for weekly losses, as traders looked ahead to a weekend meeting of the Organization of the Petroleum Exporting Countries and its allies.
Price action
-
West Texas Intermediate crude for July delivery
CL.1,
+2.84% CL00,
+2.84% CLN23,
+2.84%
rose $1.82, or 2.6%, to $71.92 a barrel on the New York Mercantile Exchange. Prices for the front-month contract traded around 1.1% lower for the week, FactSet data show. -
August Brent crude
BRN00,
+2.79% BRNQ23,
+2.79% ,
the global benchmark, gained $1.81, or 2.4%, to trade at $76.09 a barrel on ICE Futures Europe, down roughly 1.1% for the week. Brent and WTI are poised for their first weekly loss in 3 weeks. -
Back on Nymex, July gasoline
RBN23,
+3.11%
rose 2.7% to $2.502 a gallon, while July heating oil
HON23,
+2.70%
gained 2.5% to $2.3726 a gallon. -
July natural gas
NGN23,
+3.34%
was up 1.5% at $2.191 per million British thermal units after losing 4.8% on Thursday. Prices eyed a weekly loss of more than 9%.
Market drivers
WTI and Brent both remain on track for weekly losses of more than 1% after suffering steep May declines that were attributed to worries about the global economic outlook and worries over a potential U.S. government default. Those default worries were put to bed Thursday after the Senate passed legislation to lift the debt ceiling, sending it to President Joe Biden’s desk for signature.
The focus has shifted to a weekend meeting of OPEC and its allies, including Russia — a group known as OPEC+. Traders are gauging prospects for additional production cuts after a surprise round of April reductions failed to give crude a lasting lift.
Read: Uncertainty over Russia, frustration in Saudi Arabia cloud oil-market prospects ahead of OPEC+
“ “There has been no shortage of drama in the lead up to this weekend’s OPEC+ meeting, leaving the market rife with volatility as traders try to read the tea leaves as to what is going on behind closed doors.””
“There has been no shortage of drama in the lead up to this weekend’s OPEC+ meeting, leaving the market rife with volatility as traders try to read the tea leaves as to what is going on behind closed doors,” said Rebecca Babin, senior energy trader at CIBC Private Wealth U.S., in emailed commentary.
Signs that Russia has failed to comply with its own pledge to cut production by 500,000 barrels a day have sparked speculation of a potential rift between Riyadh and Moscow.
“In reality, there are many more reasons for the group to work together than break apart and members will likely remain steadfast in defending their relationship. However, the damage to the market has been done as the negative feedback loop of weaker macro data and OPEC+ risk emboldened sellers,” said Babin.
“The bullish thesis for crude is on life support making the mistake in messaging very costly,” she said.
Babin said the most likely outcome will be no change to output, while a surprise cut would inject more volatility into the market and be interpreted by oil bears as a sign that demand for crude remains weak.
“The objective of this meeting is likely to convince the market that the Saudi-Russia relationship remains intact and that they are ready to act if needed,” Babin said.
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