Oil is heading for its second consecutive weekly price decline amid expectations of an OPEC+ decision
Kyiv • UNN
Oil prices are falling due to expectations of increased OPEC+ production in July. Uncertainty is also added by the decision on Trump's tariffs, which have been temporarily restored.
Oil prices were on track for a second consecutive weekly decline on Friday, weighed down by expectations of another OPEC+ production increase in July and renewed uncertainty after a recent legal twist kept US President Donald Trump's tariffs in place, UNN reports citing Reuters.
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Brent crude futures fell 31 cents, or 0.48%, to $63.84 a barrel by 04:24 GMT (07:24 Kyiv time). US West Texas Intermediate crude fell 31 cents, or 0.51%, to $60.63 a barrel.
Both brands have fallen in price by 1.5% this week.
The downward trajectory is largely due to the prospect of rising supplies, as investors assessed another price hike by the Organization of the Petroleum Exporting Countries and its allies, a group known as OPEC+, when its eight members meet on Saturday.
"The stage is set for another sharp increase in production," said Robert Rennie, head of commodity and carbon research at Westpac, in a note, which could prove higher than the 411,000 barrels per day increase agreed at the two previous meetings.
The potential increase comes as the global surplus has increased to 2.2 million barrels per day, which is likely to require price adjustments to respond from the supply side and restore balance, JPMorgan analysts said in a note.
They expect prices to remain in their current ranges before falling to $50 by the end of the year.
In the US, Trump's tariffs were to remain in effect after a federal appeals court temporarily reinstated them on Thursday, overturning a trade court ruling on Wednesday to immediately block the most sweeping tariffs.
The blockade led to a drop in oil prices of more than 1% on Thursday, as traders weighed the implications. Analysts say uncertainty will persist as customs battles continue.
Oil prices have fallen more than 10% since Trump announced his "Liberation Day" tariffs on April 2.
On the demand side, recession fears caused by the trade war have clouded the outlook. In addition to trade tensions between the US and China, Washington has ordered a wide range of companies to stop supplying goods, including ethane and butane, to China without a license, and has revoked licenses already issued to some suppliers.
Global oil demand has improved compared to the previous week, driven by the recovery of oil consumption in the US and active travel over the long Memorial Day weekend, JPMorgan analysts noted.
Nevertheless, monthly growth in global oil demand is around 400,000 barrels per day as of May 28, which is 250,000 barrels per day below expectations, they said.