Oil Prices Edge Up on Supply Reassurances, but Weekly Losses Loom

Oil prices experienced a slight uptick on Friday as Saudi Arabia and Russia, key members of OPEC+, signaled their willingness to adjust output agreements if necessary. However, the market remains on track for its third consecutive weekly loss, primarily due to concerns about increased supply following the recent OPEC+ meeting.

Brent crude futures rose 0.2% to $80.01 per barrel, while U.S. West Texas Intermediate (WTI) crude futures increased 0.2% to $75.71. Prices had rallied on Thursday following reassuring comments from Saudi Arabia and Russia regarding their commitment to supply pacts.

Despite the recent gains, oil benchmarks are expected to close the week lower, primarily due to the OPEC+ decision to gradually unwind some voluntary production cuts, starting in October. This move has been interpreted by analysts as bearish for prices, leading to a decline in the market.

Saudi Energy Minister Prince Abdulaziz bin Salman emphasized OPEC+’s readiness to pause or reverse the voluntary output increases if the market’s strength is deemed insufficient. Russian Deputy Prime Minister Alexander Novak echoed this sentiment, stating that the price drop after the OPEC+ meeting was caused by a misinterpretation of the agreement and “speculative factors.”

Investors are also closely watching the upcoming U.S. non-farm payrolls data for May, due later on Friday, which could provide insights into the timing of potential Federal Reserve rate cuts this year. The European Central Bank’s recent rate cut has further fueled expectations of similar action by the Fed, which could boost oil demand.

Meanwhile, data from China, the world’s largest crude importer, revealed that the country imported 46.97 million metric tons of crude oil in May, underscoring its continued demand for oil despite the broader market concerns.

In conclusion, oil prices are experiencing a temporary rebound due to reassuring comments from OPEC+ members, but the market remains cautious about the potential for increased supply and its impact on prices. The upcoming U.S. nonfarm payrolls data and further developments in the global economic landscape will likely play a significant role in shaping the future direction of oil prices.