Oil prices pushed up by low chances of OPEC+ supply boost

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

Brent crude futures for September settlement, due to expire on Friday, gained $2.34 to $109.48 a barrel by 0933 GMT for its highest since July 5. The more active October contract was up $2.30 at $104.13.

US West Texas Intermediate (WTI) crude futures rose $2.16 to $98.58 a barrel. Both contracts are set for a second monthly loss, however, down 4.6per cent and 6.8per cent, respectively.

A weaker dollar and stronger equities also lent support on Friday. A fall in the dollar makes oil cheaper for buyers with other currencies, Reuters reported.

Global equities, which often move in tandem with oil prices, were up on the hope that U.S. monetary tightening would not be as hawkish as initially expected after disappointing growth figures.

“It certainly feels like we are back in trade-off mode again, where sentiment is shifting between recessionary risks in H2 and a fundamentally undersupplied (oil) market,” said Stephen Innes, managing partner at SPI Asset Management.

Front-month Brent futures are selling at a rising premium to later-loading months , a market structure known as backwardation, indicating tight current supply.

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

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

OPEC+ sources said the group will consider keeping oil output unchanged for September, with two OPEC+ sources saying a modest increase would be discussed. A decision not to raise output would disappoint the United States after US President Joe Biden visited Saudi Arabia this month hoping to strike a deal to open the taps.