Oil prices pushed up by low chances of OPEC+ supply boost
LONDON, July 29 (Reuters) – Oil prices rose in European trading on Friday as attention turned to next week’s OPEC+ meeting and expectations that it will dash U.S. hopes for a supply boost.
Brent crude futures for September settlement, due to expire on Friday, gained $2.34 to $109.48 a barrel by 0933 GMT for its highest since July 5. The more active October contract was up $2.30 at $104.13.
U.S. West Texas Intermediate (WTI) crude futures rose $2.16 to $98.58 a barrel.
Both contracts are set for a second monthly loss, however, down 4.6% and 6.8%, respectively.
A weaker dollar and stronger equities also lent support on Friday. A fall in the dollar makes oil cheaper for buyers with other currencies.
Global equities (.MIWD00000PUS), which often move in tandem with oil prices, were up on the hope that U.S. monetary tightening would not be as hawkish as initially expected after disappointing growth figures.
“It certainly feels like we are back in trade-off mode again, where sentiment is shifting between recessionary risks in H2 and a fundamentally undersupplied (oil) market,” said Stephen Innes, managing partner at SPI Asset Management.
Front-month Brent futures are selling at a rising premium to later-loading months , a market structure known as backwardation, indicating tight current supply.
“The oil market in Europe is considerably tighter than in the U.S., which is also reflected in the sharply falling Brent forward curve,” said Commerzbank analyst Carsten Fritsch.
A key driver will be the next meeting of the Organization of the Petroleum Exporting Countries (OPEC) and allies led by Russia, together known as OPEC+, on Aug. 3.
OPEC+ sources said the group will consider keeping oil output unchanged for September, with two OPEC+ sources saying a modest increase would be discussed. read more
A decision not to raise output would disappoint the United States after U.S. President Joe Biden visited Saudi Arabia this month hoping to strike a deal to open the taps. read more
Analysts, however, said it would be difficult for OPEC+ to boost supply, given that many producers are already struggling to meet production quotas.
Reporting by Shadia Nasralla Additional reporting by Sonali Paul in Melbourne and Jeslyn Lerh in Singapore Editing by David Goodman