By Barani Krishnan
Investing.com - Oil prices ended the week down about 1% percent or more, reacting to contrasting supply-demand concerns ahead of the monthly meeting of producers cartel OPEC+.
Futures of both U.S. crude and U.K.’s Brent oil rose for a second day in a row on Friday but not enough to offset their dismal start to the week.
Oil prices fell as much as 3% between Tuesday and Wednesday on worries about an explosion of Covid cases in India and Japan, and talk that Iran may win a nuclear deal by May that would effectively remove U.S. sanctions on the Islamic Republic and allow it to put some two million additional barrels a day on the market.
Some of those supply-demand concerns eased in the last two days of the week, allowing prices to rise less than 2% combined.
“Gains in oil are likely to remain capped until India and Japan, as the third and fourth-largest oil consumers, turn a corner in their battle against the virus,” said Sophie Griffiths, head of UK and EMEA research for online broker OANDA.
New York-traded West Texas Intermediate, the benchmark for U.S. crude, settled Friday’s trade at $62.14 a barrel, up 71 cents, or 1.2%, on the day. It fell 1.6% on the week.
London-traded Brent, the global benchmark for crude, settled at $66.11, up 71 cents, or 1.1%, for the session. For the week, it fell 1%.
The volatility came ahead of the April 28 OPEC+ meeting, where the cartel is expected to mull again on how much to produce in the coming months.
The 23-member OPEC+ comprises the original 13 members of OPEC, or the Saudi-led Organization of the Petroleum Exporting Countries, and 10 other oil producing nations steered by Russia. The group announced early this month its first meaningful production hike in a year, after withholding at least seven million barrels per day in output since April 2020.
In its April 1 announcement, OPEC+ said it will pump an additional 350,000 barrels per day in May and June, and a further 400,000 barrels daily in July.
It is not known if it will proceed with those plans now, especially with reports that Iran might get a nuclear deal by May.
Oil prices fell to historic negative pricing of minus $40 per barrel in April 2020 at the height of the demand destruction caused by the Covid-19 pandemic. Production cuts since then by OPEC+ have brought the market back, with the rebound accelerating after vaccine breakthroughs for the virus in November.