SINGAPORE: Oil prices settled up by more than $3 a barrel on Friday, supported by tight supply, as the market balanced fears of slower demand from cooling US economic activity with supply uncertainty.
Brent crude settled up $3.07, or 2.8 percent, at $113.12 a barrel. US West Texas Intermediate is currently priced at $3.35, or 3.2 percent, at $107.62.
Crude futures slipped back into sell mode after US manufacturing and services PMIs came in well below expectations, along with a downswing in Germany’s manufacturing data, said Stephen Innes, managing partner at SPI Asset Management.
“Under these conditions, higher crude oil prices will become super sensitive to any perceived or otherwise increased supply inputs,” Innes said, noting signs of Russian crude hitting the oil complex and mounting pressure on the Organization of the Petroleum Exporting Countries and its allies, known as OPEC+, to boost output.
OPEC+ will likely stick to a plan for accelerated output increases in August in hopes of easing crude prices and inflation as US President Joe Biden plans to visit Saudi Arabia, sources said.
OPEC+ agreed at its last meeting on June 2 to boost output by 648,000 barrels a day in July, or 7 percent of global demand, and by the same amount in August, up from the initial plan to add 432,000 barrels per day a month over three months until September.
The move followed months of pressure from the West to address global energy shortages worsened by Western sanctions on Russia over its invasion of Ukraine and was welcomed by Washington.
However, the group has struggled to hit the monthly increase targets due to underinvestment in oilfields by some OPEC members and, more recently, losses in Russian output.
Official weekly estimates for US oil inventories were scheduled to be released on June 23 but technical problems will delay those figures until this week, the US Energy Information Administration said, without giving a specific timeline.
OPEC+ holds its next meeting on June 30, when it will most likely focus on August output policies.
“OPEC+ is not going to change the plans at this month's meeting,” an OPEC+ source said. Four other sources made similar remarks.
