Oil gains on outlook
NEW YORK - Oil futures rose on Friday, reversing early losses and set for a fourth week of gains after OPEC sources said the producer group expected limited US oil output growth this year despite rising prices.
Officials at the Organization of the Petroleum Exporting Countries got the US production outlook from industry experts, OPEC sources said.
This would give the producer group more power to manage the market before a potential surge in shale output in 2022.
Brent crude futures rose 43 cents, or 0.6 per cent to settle at $73.51 a barrel. US West Texas Intermediate (WTI) crude rose 60 cents, or 0.8 per cent to $71.64 a barrel.
Both benchmarks were headed for a weekly gain of about 1.1 per cent.
“Oil markets are rallying because OPEC is skeptical that the increase in US oil production is going to be enough to change their plans to support prices,” said Phil Flynn, senior analyst at Price Futures Group in Chicago.
On Wednesday, Brent settled at its highest price since April 2019 and WTI closed at its highest since October 2018.
Gains were capped by lingering concerns about the pandemic and a stronger US dollar, which makes oil more expensive in other currencies.
Sources told Reuters that on Tuesday, officials from OPEC’s Economic Commission Board (ECB) and external presenters attended a meeting focused on US output.
OPEC heard from more forecasters on the outlook for 2021 and 2022 at a separate meeting on Thursday.
While there was general agreement on limited US supply growth this year, an industry source said for 2022 forecasts ranged from growth of between 500,000 and 1.3 million barrels per day.
“The general sentiment regarding shale was it will come back as prices go up but not super fast,” said a source at one of the companies that provided forecasts to OPEC.