Saudi Arabia strengthens position as largest Arab economy: Report

SINGAPORE: Oil prices traded sideways on Friday after briefly rising nearly $1 per barrel, as the market balanced fears of slower demand from cooling US economic activity with supply uncertainty.

Brent crude futures were trading down 5 cents, or 0.1 percent, at $110.00 a barrel by 0310 GMT, while US West Texas Intermediate crude futures were up 19 cents, or 0.2 percent, at $104.46 a barrel. Prices fell around 1.5 percent in the previous session.

Crude futures slipped back into sell mode after US manufacturing and services PMIs came in well below expectations, along with a downswing in Germany’s manufacturing data, said Stephen Innes, managing partner at SPI Asset Management.

“Under these conditions, higher crude oil prices will become super sensitive to any perceived or otherwise increased supply inputs,” Innes said, noting signs of Russian crude hitting the oil complex and mounting pressure on the Organization of the Petroleum Exporting Countries and its allies, known as OPEC+, to boost output.

OPEC+ will likely stick to a plan for accelerated output increases in August in hopes of easing crude prices and inflation as US President Joe Biden plans to visit Saudi Arabia, sources said.

OPEC+ agreed at its last meeting on June 2 to boost output by 648,000 barrels a day in July, or 7 percent of global demand, and by the same amount in August, up from the initial plan to add 432,000 barrels per day a month over three months until September.

The move followed months of pressure from the West to address global energy shortages worsened by Western sanctions on Russia over its invasion of Ukraine, and was welcomed by Washington.

However, the group has struggled to hit the monthly increase targets due to underinvestment in oilfields by some OPEC members and, more recently, losses in Russian output.

Official weekly estimates for US oil inventories were scheduled to be released on Thursday but technical problems will delay those figures until next week, the US Energy Information Administration said, without giving a specific timeline. 

OPEC+ holds its next meeting on June 30, when it will most likely focus on August output policies.

“OPEC+ is not going to change the plans at this month’s meeting,” an OPEC+ source said. Four other sources made similar remarks.