Oil rebounded from Thursday’s sell-off and erased intra-session losses to close in positive territory, with US crude jumping 2.5% and posting gains for the week.
The black gold was coming off a 6-month run of gains as Brent rallied 48% in the first half of the year, and 6% in the second quarter. Accordingly, US crude ended the first half of the year with a 41% increase in price, while it gained 5.5% in the second quarter.
Oil futures edged higher on Friday, with US prices up about 0.8% for the week.
THE OPEC+ pulled no surprises this week, saying it would stick to planned increases in oil production in August,” said an economist at the NLI Research Institute.
“But uncertainty about OPEC+ policy through and beyond September and concerns that aggressive rate hikes by the US central bank will push the US into recession and hit fuel demand are weighing on sentiment,” adds own.
Based on its decision, OPEC+ will increase the total production of its members by 648,000 barrels per day in both July and August. The decision was made despite the particularly “pressured” global offer.
On the other hand, OPEC failed to meet its goal of increasing oil production promised under the agreement with its allies, according to a Reuters survey, as production cuts in Libya and Nigeria offset an increase in supply from Saudi Arabia and other major producers.
It pumped 28.52 million barrels per day (bpd) in June, the survey showed, down 100,000 bpd from May’s revised total. OPEC had planned to raise June production by about 275,000 barrels per day.
“Low investment in oil discovery and refinery shutdowns during the 2020 pandemic-induced recession have led to a lack of supply,” FXTM analyst Lukman Otunuga said. “Geopolitical developments with Russia’s war in Ukraine have added fuel to the fire,” he added, and oil bulls are “supported by various forces” that may push oil prices higher.
However, “concerns about tighter monetary policy pushing the global economy into recession could hurt the demand outlook for oil, limiting gains,” he said.
In this climate, the slow press West Texas Intermediate U.S. crude for August delivery rose $2.67, or 2.5%, to settle at $108.43 a barrel. On the week WTI gained 0.8%, according to Dow Jones Market Data.
The type oil Brent U.S. crude for September delivery gained $2.60, or 2.4%, to $111.63 a barrel on Friday, with the contract climbing 2.3% on the week.