Oil prices in Asian trading on Friday extended their mid-week rebound following reassurances from OPEC+ members about potential supply increases. Market sentiment was buoyed further by rate cuts in Canada and Europe.
Despite this, oil markets were poised to end the week with losses after OPEC+ indicated it might ease production cuts later in the year. Brent oil futures expiring in August edged up 0.2% to reach $80.07 per barrel, while West Texas Intermediate crude futures rose 0.4% to $75.56 per barrel by 21:00 ET (01:00 GMT). Both contracts faced weekly declines of over 1%, having dropped to their lowest levels in four months.
Key OPEC+ members, including Saudi Arabia, the UAE, and Russia, emphasized at a St. Petersburg conference that market weakness could prompt the cartel to maintain supply tightness, countering fears of oversupply following the group's decision to maintain 3.6 million barrels per day of cuts until end-2024. Plans were also outlined to gradually reduce cuts by 2.2 million bpd from October 2024 to September 2025.
Earlier concerns about oversupply had driven oil prices to recent lows, but they recovered as optimism grew about potential interest rate cuts. Weak U.S. economic data heightened worries about demand but also increased expectations for Federal Reserve rate cuts starting as early as September. The Fed, however, is expected to hold rates steady at its upcoming meeting.
Meanwhile, rate cuts by the European Central Bank and the Bank of Canada added to market optimism, anticipating improved economic conditions that could support oil prices. Additionally, U.S. fuel demand is expected to strengthen with the onset of the summer travel season.
Paraphrasing text from "Investing" all rights reserved by the original author.
