Oil posted a sixth weekly gain on Friday, after a keenly anticipated OPEC+ meeting delivered only a modest increase in output that failed to assuage concerns over a widening supply deficit.
West Texas Intermediate for July delivery rose 1.71 percent to US$118.87 a barrel, posting a weekly gain of 3.3 percent.
Brent crude for August delivery increased 1.79 percent to US$119.72 a barrel, up 0.24 percent form a week earlier.
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On Thursday, the producers’ cartel agreed to a production hike, but it only amounts to 0.4 percent of global demand for next month and August.
Meanwhile, job growth in the US topped estimates, signaling continued economic growth that would bolster demand for crude and refined products.
“Crude prices remain supported as energy traders have an OPEC+ hangover,” Oanda Corp senior market analyst Edward Moya said.
He said the decision by the cartel would “keep the oil market tight throughout this summer.”
On Thursday, OPEC+ agreed to production hikes of 648,000 barrels a day for next month and August, about 50 percent more than the increases seen in the past few months. That means the group would be adding about 400,000 barrels a day of crude across those two months, on top of the modest increases already agreed.
Still, doubts persist that the group would fully deliver on the pledged increases, given that many members have struggled to raise output.
The decision by OPEC+ could, in practice, mean 132,000 barrels a day each month of actual additional output from Iraq, Kuwait, Saudi Arabia and the United Arab Emirates, Citigroup Inc said in a note.
Prices have been marching higher in the past week as the EU agreed to ban Russian oil, Chinese lockdowns were lifted and the US summer driving season got under way, it said.
Oil has soared this year on rebounding demand as countries threw off COVID-19 restrictions, while Russia’s invasion of Ukraine has reduced supply from one of the world’s three-biggest producers. A potential resurgence in consumption in China, the No. 1 crude importer, is now threatening to add even more upward pressure to prices.
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