Oil finishes down on possible OPEC+ output hike
[HOUSTON] US crude futures fell on Friday (May 30) as traders expected Opec+ would decide on Saturday to boost oil output for July beyond previous forecasts.
Brent crude futures settled down 25 cents, or 0.39 per cent, at US$63.90 a barrel. US West Texas Intermediate crude finished down 15 cents, or 0.25 per cent, at US$60.79 a barrel, having earlier dropped more than US$1 a barrel.
The Brent July futures contract is due to expire on Friday. The more liquid August contract was down 71 cents, or 1.12 per cent, at US$62.64 a barrel.
At these levels, the front-month benchmark contracts were headed for weekly losses over 1 per cent.
Prices dipped into negative territory after Reuters reported that Opec+ may discuss an increase in July output larger than the 411,000 barrels per day (bpd) rise that the group decided on for May and June.
'What Opec+ is planning doesn't look particularly supportive for the oil market,' said Matt Smith, Kpler's lead analyst for the Americas.
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The potential Opec+ output hike comes as the global surplus has widened to 2.2 million bpd, likely necessitating a price adjustment to prompt a supply-side response and restore balance, said JPMorgan analysts in a note, adding that they expected prices to remain within the current range before easing into the high US$50s by year-end.
Phil Flynn, a senior analyst with Price Futures Group, said an online post on Truth Social by US President Donald Trump that seemed to threaten more changes in tariff levels for Chinese imports also put pressure on crude prices.
'Trump's Truth Social message on China failing to observe a truce on tariffs also combined with the Reuters headline to push prices down,' Flynn said.
Trump's tariffs were expected to remain in effect after a federal appeals court temporarily reinstated them on Thursday, reversing a trade court's decision a day earlier to put an immediate block on the sweeping duties.
US energy firms this week cut the number of oil and natural gas rigs operating for a fifth week in a row to the lowest since November 2021, energy services firm Baker Hughes said in its closely followed report on Friday.
It was the first time since September 2023 that the number of rigs declined for five straight weeks.
Baker Hughes said this week's decline put the total count down by 37 rigs, or 6 per cent, from this time last year.
Oil rigs fell by four to 461 this week, their lowest since November 2021, the company said. Gas rigs rose by one to 99. REUTERS
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