Oil prices rose during the Asian trading session on Friday, extending the mid-week rebound, as OPEC+ members attempted to ease market concerns about potential supply increases. Traders also welcomed interest rate cuts in Canada and Europe.
Nevertheless, the oil market remained under pressure this week. OPEC and its allies (OPEC+) recently indicated at their meeting that they might begin to gradually reduce production cuts later this year.
As of 9:00 PM Eastern Time (1:00 AM GMT), Brent crude futures for August delivery rose by 0.2% to $80.07 per barrel, while West Texas Intermediate crude futures increased by 0.4% to $75.56 per barrel. Both contracts are expected to fall over 1% this week after hitting four-month lows.
OPEC+ Clarifies Supply Increase is Not a Done Deal
According to Reuters, the energy ministers of Saudi Arabia, the United Arab Emirates, and Russia stated at a meeting in St. Petersburg on Thursday that a weak market might still lead OPEC+ to tighten supply.
Earlier, OPEC+ announced over the weekend that it would maintain daily production cuts of 3.6 million barrels until the end of 2024 but also outlined a detailed plan to gradually reduce cuts by 2.2 million barrels per day from October 2024 to September 2025.
This news severely impacted oil prices, causing them to fall to four-month lows as traders worried that increased production could lead to oversupply, especially if demand deteriorates in the coming months.
Rate Cut Expectations Help Oil Prices Recover Weekly Losses
However, optimism over interest rate cuts has kept crude prices well above four-month lows, recouping most of the losses.
A series of weak U.S. economic data heightened concerns about deteriorating demand but also raised market expectations that the Federal Reserve might start cutting rates in September.
