Oil is moving higher as hopes that OPEC+ will increase production fade

Oil prices rose in European trade on Friday as attention turned to next week’s OPEC+ meeting and expectations that it will dash U.S. hopes for a supply boost.

Brent futures for September, which expire on Friday, gained $2.30 to trade at $109.44 a barrel, after touching their highest level since July 5, according to Reuters. The most active October contract (LCOc2) was up $2.24 at 104.07.

West Texas Intermediate (WTI) futures ( CLc1 ) rose $2.20 to $98.62 a barrel.

However, both contracts are expected to post a second monthly loss, down 4.7% and 6.8% respectively.

A weaker dollar and stronger stocks also provided a boost to the price on Friday. A falling dollar makes oil cheaper for buyers in other currencies.

Global stocks, which often move in tandem with oil prices, rose on hopes that US monetary tightening will not be as hawkish as initially expected after disappointing growth data.

A Reuters poll had forecast Brent and US crude to average $105.75 and $101.28 a barrel this year, respectively.

“The oil market in Europe is significantly tighter than in the US, which is also reflected in the sharply falling Brent forward curve,” said Commerzbank analyst Carsten Fritsch.

A key factor will be the next meeting of the Organization of the Petroleum Exporting Countries (OPEC) and its allies led by Russia, collectively known as OPEC+, on August 3.

OPEC+ sources said the group would consider keeping oil output unchanged for September, while two OPEC+ sources said a modest increase would be discussed.

A decision not to increase production would disappoint the United States after US President Joe Biden visited Saudi Arabia this month hoping to reach a deal to turn on the taps.

Analysts, however, said it would be difficult for OPEC+ to increase supply given that many producers are already struggling to meet output quotas.