Oil heads for first weekly loss since April on OPEC+ supply hike expectations

Oil prices edged higher on Friday, but were set for their first weekly decline in three weeks, weighed down by rising expectations of another large OPEC+ output increase for July.

Brent futures rose 30 cents, or 0.47%, to $64.74 a barrel. U.S. West Texas Intermediate crude futures were up 27 cents, or 0.44%, to $61.47.

Both contracts are set to lose more than 1% on the week following two weeks of gains.

OPEC+ which groups the Organization of the Petroleum Exporting Countries and allies led by Russia, is holding meetings next week expected to yield another output increase of 411,000 barrels per day for July.

Reuters reported earlier this month that the group may unwind the rest of its 2.2 million bpd voluntary production cut by the end of October, having already raised output targets by about 1 million bpd for April, May and June.

“Brent is down … along with expectations that OPEC+ will lift its production quota by another 411,000 bpd in July,” SEB analyst Bjarne Schieldrop said.

The supply tailwind offset jitters earlier this week triggered by a report saying Israel is making preparations to strike Iranian nuclear facilities and new sanctions announced by the European Union and Britain on Russia’s oil trade.

A large crude oil build in the U.S. also weighed on oil prices.

As traders brace for a flood of increased supply in coming months from OPEC+, U.S. crude oil storage demand has surged in recent weeks to levels similar to the COVID-19 pandemic, according to data from storage broker The Tank Tiger.

On Friday, the market will watch for U.S. oil and gas rig count data from Baker Hughes that is used as an indicator for future supply.

The market is also closely watching U.S.-Iranian nuclear negotiations which could determine the future supply of Iranian oil. The fifth round of talks will take place in Rome on Friday.