Oil climbs ahead of OPEC+ meeting

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Oil prices rose on Friday on expectations that OPEC+ will discuss output cuts at a meeting on Sept. 5, though concern over China’s Covid-19 curbs and weakness in the global economy loomed over the market.

Brent crude futures rose 66 cents to settle at $93.02 a barrel, while US West Texas Intermediate (WTI) crude futures rose 26 cents to settle at $86.87 a barrel.

Both benchmarks slid 3% to two-week lows in the previous session. Brent posted a weekly drop of 7.9%, and WTI of 6.7%. A weekly chart shows that US crude futures surpassed last week’s high and have since retreated, and closed below last week’s closing level.

That is a bearish signal, according to Eli Tesfaye, senior market strategist at RJO Futures in Chicago. “When you take out the week’s high and week’s low and then close lower, that’s a reversal down – it’s a signal that there’s weakness, and that’s telling you it’s a weak market,” he said.

The Organization of the Petroleum Exporting Countries and allies led by Russia – a group known as OPEC+ – are due to meet on Sept. 5 against a backdrop of expected demand declines, though top producer Saudi Arabia says supply remains tight.

OPEC+ is likely to keep oil output quotas unchanged for October at Monday’s meeting, three OPEC+ sources said, although some sources would not rule out a production cut to bolster prices that have slid from sky-high levels hit 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), against 900,000 bpd forecast previously. The producer group expects a market deficit of 300,000 bpd in its base case for 2023.

(Reuters)