Oil experience its most significant weekly decline in a month as the OPEC+ meeting approaches
Oil prices declined by 1 percent on Friday, positioning themselves for the most significant weekly losses since late March, as traders adopted a cautious stance in anticipation of an OPEC+ meeting to determine the group’s output policy for June. US West Texas Intermediate crude futures declined by $1.11, representing a decrease of 1.9 percent, settling at $58.13 a barrel at 1:23 p.m. ET (1723 GMT). Brent crude futures experienced a decline of 94 cents, representing a 1.5 percent decrease, settling at $61.19 per barrel. For the week, Brent was poised to decline approximately 8.6 percent, while WTI was set to decrease around 8 percent.
The OPEC+ meeting has been rescheduled to Saturday from its initial plan of Monday, according to three sources who spoke to Reuters on Friday. The reasons for this change in schedule remain unclear at this time. Members of the group, which includes the Organization of the Petroleum Exporting Countries and its allies, are considering whether to implement another accelerated oil output increase in June or to opt for a more modest hike, according to two sources.
Oil traders are preparing for increased supply from the group, coinciding with heightened concerns regarding an economic slowdown stemming from the trade conflict between the US and China, which has led market analysts to revise down their projections for demand growth this year. “This market is currently dominated by OPEC, with the tariff war now taking a secondary role,” stated United ICAP energy specialist Scott Shelton.
This week, Reuters conveyed that officials from Saudi Arabia, the de facto leader of OPEC+, have informed allies and industry experts of their reluctance to support oil markets through additional supply reductions. OPEC+ is presently reducing production by more than 5 million barrels daily.
Traders exhibited caution in light of the potential for a de-escalation of the trade dispute between China and the United States, following Beijing’s announcement on Friday that it was assessing a proposal from Washington to engage in discussions regarding US President Donald Trump’s tariffs. “There is some optimism when it comes to US-China relations, but the signs are only very tentative,” stated Harry Tchilinguirian, group head of research at Onyx Capital Group. “The situation remains quite dynamic, characterized by a one step forward, two steps back approach regarding tariffs.”
A statement by Trump on Thursday regarding the potential imposition of secondary sanctions on purchasers of Iranian oil contributed to a reduction in oil price pressures, as it may lead to a contraction in global supply. The recent threat, emerging in the wake of postponed US discussions regarding Iran’s nuclear program, may further complicate trade negotiations with China, the leading global importer of Iranian crude oil.
Friday’s oil price decline was moderated by the uptick in equity markets, according to UBS analyst Giovanni Staunovo, as Wall Street advanced following the release of US jobs data indicating a greater-than-expected increase in payrolls last month.
