Oil pumpjacks operate near residences in Los Angeles, California.
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Oil prices rose on Friday on expectations that OPEC+ will discuss production cuts at a Sept. 5 meeting, though worries about China’s COVID-19 restrictions and weak oil global economy hover in the market.
Brent crude futures rose 66 cents to settle at $93.02 a barrel, while U.S. West Texas Intermediate (WTI) crude futures rose 26 cents to settle at $93.02 a barrel. $86.87 per barrel.
Both benchmarks slipped 3% to two-week lows in the previous session. Brent posted a weekly decline of 7.9% and WTI of 6.7%.
A weekly chart shows that US crude futures broke above last week’s high and have since pulled back, and closed below last week’s closing level. That’s a bearish signal, according to Eli Tesfaye, senior market strategist at RJO Futures in Chicago.
“When you pull out the high and low for the week and then close lower, that’s a down reversal – that’s a signal that there’s weakness, and it tells you that it’s a weak market,” he said.
The Organization of the Petroleum Exporting Countries and its Russia-led allies – a group known as OPEC+ – are due to meet on September 5 amid an expected drop in demand, although the main Saudi producer says that supply remains tight.
OPEC+ is expected to keep oil production quotas unchanged for October at Monday’s meeting, three OPEC+ sources said, although some sources are not ruling out a production cut to support prices which have fallen from the dizzying levels reached earlier this year.
OPEC+ this week revised market balances for this year and now sees demand lagging supply by 400,000 barrels per day (bpd), compared to 900,000 bpd previously forecast. The producer group expects a market deficit of 300,000 bpd in its base case for 2023.
Meanwhile, Iran said it had sent a “constructive” response to US proposals to revive Tehran’s 2015 nuclear deal with world powers. The United States gave a less positive assessment.
The news has made some investors skeptical that a deal is imminent, which has supported oil prices, said Phil Flynn, an analyst with Price Futures Group in Chicago.
“There’s less confidence that we’re going to get a deal with Iran and that leads to short coverage,” Flynn said.
G7 finance ministers agreed on Friday to impose a price cap on Russian oil, but provided few new details on the plan to cut Moscow’s war revenue in Ukraine while maintaining crude oil to avoid price spikes.
In the United States, employers hired more workers than expected in August, but moderate wage growth and a rise in the unemployment rate to 3.7% could ease pressure on the Federal Reserve to make a third interest rate hike of 75 basis points this month.
U.S. energy companies cut the number of operating oil and gas rigs this week for the fourth time in five weeks. The number of U.S. oil and gas rigs, an early indicator of future production, fell 5 to 760 in the week to Sept. 2, Baker Hughes Co said Friday.
Russia’s Gazprom said Friday that natural gas supplies through the Nord Stream 1 gas pipeline would remain closed after the main gas turbine at the Portovaya compressor station near St. Petersburg leaked oil.
Investors remain concerned about the impact of the latest COVID-19 related restrictions in China. The city of Chengdu on Thursday ordered a lockdown that hit automakers like Volvo.
Data showed Chinese factory activity in August contracted for the first time in three months amid weakening demand, while power shortages and COVID-19 outbreaks also disrupted the production.
