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[NEW YORK] Oil prices fell more than 1 per cent lower on Friday (May 2) and recorded their biggest weekly losses since the end of March, as traders turned cautious ahead of an Opec+ meeting to decide the group’s output policy for June.
US West Texas Intermediate (WTI) crude futures settled 95 US cents or 1.6 per cent to settle at US$58.29 a barrel. Brent crude futures closed down 84 cents or 1.4 per cent at US$61.29 a barrel.
For the week, Brent fell over 8 per cent and WTI lost about 7.7 per cent.
The Opec+ meeting was moved up to Saturday from the original plan of Monday, three sources told Reuters on Friday, although it was not clear why the meeting was rescheduled.
Members of the group, which includes the Organization of the Petroleum Exporting Countries and its allies, are deliberating whether to make another accelerated oil output increase in June or stick with a smaller hike, two of the sources said.
Either way, oil traders braced for more supply from the group, at a time when fears of an economic slowdown caused by a trade war between the US and China have prompted market experts to lower demand growth expectations for this year.
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“This market is all about Opec now with even the tariff war taking a back seat,” United Icap energy specialist Scott Shelton said.
Reuters reported this week that officials from Saudi Arabia, the de facto leader of Opec+, have briefed allies and industry experts that they are unwilling to prop up oil markets with further supply cuts.
Opec+ is currently cutting output by more than five million barrels per day.
Traders were also cautious given the possibility of a de-escalation of the trade dispute between China and the US, after Beijing on Friday said it was evaluating a proposal from Washington to hold talks to address US President Donald Trump’s tariffs.
“There is some optimism when it comes to US-China relations but the signs are only very tentative,” Harry Tchilinguirian, group head of research at Onyx Capital Group, said.
Friday’s oil price decline was kept in check by rising equity markets, UBS analyst Giovanni Staunovo said, as Wall Street climbed after US jobs data showed payrolls increased more than expected last month.
A threat by Trump on Thursday to impose secondary sanctions on buyers of Iranian oil also helped ease some of the pressure on oil prices, as it could tighten global supply.
The threat, which came after US talks with Iran over its nuclear programme were postponed, could also complicate trade talks with China, which is the world’s largest importer of Iran’s crude.
Signs of slowing US oil output growth could also be somewhat supportive for oil prices from a longer-term point of view, StoneX oil analyst Alex Hodes said.
US drillers cut the number of oil rigs operating for the first time in three weeks, data from oilfield services provider Baker Hughes showed. The oil rig count, an early indicator of future output, fell by four to 479 this week. REUTERS
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