Oil prices fell on Friday, ending the week with losses as investors focused on Sunday’s OPEC+ meeting that will decide the fate of the producer group’s output cuts.
Brent futures for July delivery fell 24 cents, or 0.3%, to $81.62 a barrel, while the more liquid August contract fell 77 cents, or 0.8%, to $81.11. WTI crude futures fell 92 cents, or 1.2%, to $76.99.
Markets had seen OPEC+ work out a complex deal that would allow it to extend some of its deep oil output cuts through 2025.
Saudi Arabia made a last-minute change of plans on Friday, inviting ministers to meet in person in Riyadh for a June meeting. The meeting was officially scheduled to be an online meeting.
According to the US Energy Information Administration (EIA), U.S. crude production rose to its highest level this year in March, while supplies of the fuel product, a proxy for demand, fell 0.4% to 19.9 million barrels a day.
The oil market has been under pressure in recent weeks because of the possibility of U.S. borrowing costs remaining high for longer, which could tie up funds and limit oil demand.
Both oil indexes were on track for their biggest monthly declines since December after falling in the previous session on a surprise increase in U.S. fuel inventories.
The U.S. summer travel season kicked off over Memorial Day weekend, with early indicators showing strong driving and flying activity, but lower fuel use, suggesting efficiency gains.
Oil prices briefly rose after U.S. government data showed inflation flattened in April, reinforcing traders’ bets that the Federal Reserve will deliver a long-awaited rate cut in September.
Eurozone inflation rose more than expected in May, according to Eurostat data. In that case, the European Central Bank is likely to cut borrowing costs next week, but the rate-cutting cycle will be slow.
Baker Hughes said in a report on Friday that the number of oil and gas rigs was steady at 600 in the week to May 31. Oil rigs fell by one this week to 496, while gas rigs rose by one to 100. However, the total number of rigs fell for the third month in a row in May and fell by 13, the most in a single month since August.
OPEC+ agreed on Sunday to extend most of its deep oil output cuts through 2024 but phase them out in 2025, as the group aims to support the market amid tepid global demand growth, higher interest rates, and rising rival U.S. production.
Oil prices are trading near $80 a barrel, below the level many OPEC+ members need to balance their budgets. Prices have been weighed down by concerns about slower demand growth in top oil importer China.
OPEC+ members are currently cutting production by a combined 5.86 million barrels per day (bpd), or about 5.7% of global demand.
The cuts include a voluntary cut of 3.66 million bpd by OPEC+ members that will last until the end of 2024 and a voluntary cut of 2.2 million bpd by some members that will expire at the end of June.
