Oil prices were little changed on Friday and closed the week lower, weakening in volatile trade amid rising supply expectations at a time when an increase in coronavirus cases could lead to lockdowns and reduced demand.
Brent futures rose 12 cents, or 0.2%, to $73.59 a barrel, while West Texas Intermediate (WTI) crude rose 16 cents, or 0.2%, to $71.81 a barrel. Earlier in the choppy session, both indicators dropped above $1 a barrel.
Despite small gains, Brent is down almost 3% this week for the third week in a row for the first time since April 2020. WTI is down almost 4% this week, making it its biggest weekly percentage drop since March.
U.S. retail sales unexpectedly rose in June as demand for goods remained strong even as spending returned to services, bolstering expectations for economic growth to pick up in the second quarter.
Oil prices have soared over the past few months, while the number of US oil rigs has continued to rise slowly, gaining two rigs this week, reaching 380 active units, its highest level since April 2020, according to energy services firm Baker Hughes.
U.S. crude oil production has increased by 11.4 million barrels in the week of July 9, the highest level since May 2020, according to federal data, by 300,000 barrels per day (bpd) in the past two weeks.
The Organization of the Petroleum Exporting Countries, Russia and their allies OPEC+ had previously failed to reach an agreement after the UAE sought a higher basis for production cuts. However, the main actors of the discussion, Saudi Arabia and the United Arab Emirates reached a compromise, paving the way for OPEC+ producers to reach an agreement to increase production.
OPEC needs to act fast, the longer it takes OPEC+ to announce an extraordinary meeting to vote on output growth, the more other OPEC+ members may want to increase their base quotas. The news that Iraq is trying to raise the baseline is remarkable.
OPEC expects world oil demand to increase next year. He said on Thursday he expects world oil demand to rise to around 100 million bpd seen before the pandemic next year, led by demand growth in the US, China and India.
But the rise in coronavirus cases related to the highly contagious Delta variant could trigger new lockdowns, lowering forecasts for increased oil demand in the near future.
In the United States, the city of Los Angeles will restart mask application this weekend. The UK reported the highest number of new COVID-19 cases in more than six months on Friday.
