(New York) Oil prices fell on Friday, investors positioning themselves before the weekend and the holding of an OPEC+ meeting during which the renewal of production cuts is expected.
Posted at 7:53 a.m.
Updated at 3:24 p.m.
The price of a barrel of Brent from the North Sea, for delivery in July, which is the last day of use as a reference contract, fell 0.29% to 81.62 dollars.
Its American equivalent, a barrel of West Texas Intermediate (WTI), for delivery the same month, fell 1.18% to $76.99.
Representatives of the twelve members of the Organization of the Petroleum Exporting Countries (OPEC), led by Riyadh, and their ten allies in the OPEC+ agreement led by Moscow, must decide on their production levels on Sunday during a videoconference .
“At a minimum, OPEC is expected to “extend its production cuts into the third quarter. It would hardly be a surprise if these production cuts are extended until the end of the year,” Andy Lipow of Lipow Oil Associates told AFP.
For Matt Smith of Kpler, producing countries may have to propose other measures if they want to cause a rise in barrel prices, which is the objective.
In the meantime, “brokers are afraid to stay on long positions”, betting on the rise, before the market closes for the weekend, noted the Kpler analyst.
Poor data from China also weighed on the market.
Manufacturing activity in China, a reflection of the health of factories and the industrial world, actually contracted in May, according to official figures published Friday which reflect a fragile and uneven recovery in the world’s second largest economy.
The much-hoped-for economic recovery in the country emerging from the COVID-19 pandemic at the end of 2022 was brief and less robust than expected.
“Oil is under pressure because there are signs of weaker demand in China,” said Andy Lipow.
In the United States, inflation remained at the same level as expected at 2.7%, according to the PCE index, far from the 2% target that the central bank seeks to achieve.
“We do not expect rate cuts from the Fed this year,” said Matt Smith and this is one of the reasons “why oil remained negative on Friday.”
Higher interest rates for longer risk slowing activity and energy demand, which is bearish for the oil market.
