OPEC+ seeks consensus on oil production policy after UAE roadblock. Oil prices calmed on Friday after OPEC+ ministers resumed talks on boosting oil production, a day after the UAE blocked a deal that could delay plans to pump more oil until the end of the year.
According to sources, the UAE opposes the amounts offered and wants a higher quota than OPEC+ and its allies are talking about. If the OPEC+ countries go their separate ways and add to supply as they see fit, the long rally in prices will be undermined.
Brent crude futures rose 33 cents to $76.17 after rising 1.6 percent on Thursday.
West Texas Intermediate (WTI) crude futures fell 7 cents to $75.16 a barrel after closing at the highest level since October 2018, up 2.4% on Thursday.
The market is in a wait-and-see mode on what OPEC will do. It is important for the group to stay together in terms of market dynamics and for now, it is necessary to monitor developments. The cracking or disintegration of the alliance upsets many balances.
On Thursday, both benchmark contracts rose after OPEC+ sources said the group was aiming to increase production less than expected, then withdrew as the UAE opposed proposals that included extending the production deal until the end of 2022.
WTI gained 1.5% this week as the US crude oil market is expected to contract as refinery services accelerate to meet booming gasoline demand.
US energy companies added oil and gas rigs for the third time in four weeks. Energy services firm Baker Hughes Co (BKR.N) said on Friday the number of oil and gas rigs, an early indicator of future production, rose 5 to 475 in the week of July 2, the highest since April 2020.
Concerns remain about fuel demand in Asia. Brent has been largely stable this week as the market weighs fuel demand concerns in parts of Asia where cases of the highly contagious COVID-19 Delta variant have risen.
Some analysts say they do not expect WTI to make a premium against Brent as they expect US oil production to recover at the end of 2021 and increase further in 2022.
