This article is a follow-up to: Oil prices hovering at lows with rising supply
Oil prices ticked higher on Friday, supported by reassurance from key OPEC+ members Saudi Arabia and Russia about their readiness to adjust output agreements. However, despite these gains, markets are heading towards their third straight week of losses. Brent crude oil (Symbol: UKOUSD) to $79.89 per barrel, while WTI crude oil (Symbol: USOUSD) climbed 4 cents to $75.59.
The images above show the slight uptick in oil prices, as observed on the VT Markets app.
Oil prices are likely to hover around the $76-$80 range as sentiments stabilize and markets await further cues.
The recent price rally was driven by comments from Saudi Arabia and Russia aimed at reassuring markets about their supply agreements. Saudi Energy Minister Prince Abdulaziz bin Salman emphasized that OPEC+ could pause or reverse voluntary output increases if market conditions necessitate such actions. Russian Deputy Prime Minister Alexander Novak also highlighted the readiness of the alliance to react quickly to market uncertainties, attributing the recent price drop to misinterpretation and speculative factors.
Despite these reassurance, oil prices are set for a third consecutive week of declines. The latest OPEC+ meeting minutes were interpreted to have an increase in supply, which is bearish for prices. The group agreed to extend most production cuts into 2025 but left room for gradual unwinding of voluntary cuts from eight member countries.
The recent interest rate cut by the European Central Bank has prompted expectations that the US Federal Reserve might follow suit. Lower interest rates generally boost oil demand by reducing borrowing costs and stimulating economic activity. Additionally, US non-farm payrolls data for May, due later on Friday, could provide more insight into the timing of potential Fed rate cuts this year.
In China, official customs data showed that the country imported 46.97 million metric tons of crude oil in May. This robust demand from China provides some support to global oil prices amid the supply and demand dynamics.
Oil prices are likely to remain within the $76-$80 range as markets digest OPEC+ reassurance and monitor upcoming economic data, particularly from the US and China. Potential Fed rate cuts and Chinese demand will be key factors to watch in oil trading. Continued market management by OPEC+ and adjustments to supply will be crucial in stabilizing prices.
