Crude Oil Higher; OPEC Meeting Looms Large

© Reuters.

By Peter Nurse

AiVIF.com -- Crude oil prices pushed higher Friday, heading for another positive week, as traders remained upbeat about the prospects for demand recovery ahead of next week’s meeting of top producers.

By 9:25 AM ET (1325 GMT), U.S. crude was up 0.3% at $73.50 a barrel, while Brent was up 0.3% at $74.76, with both contracts on course for a fifth weekly advance, the longest winning streak since December. 

U.S. Gasoline RBOB Futures were up 0.4% at $2.2905 a gallon.

Oil markets have soared this year, with both benchmarks near 50% higher year-to-date, on hopes of a quick return to peak demand as the successful vaccination programs allow the energy-guzzling economies in Europe, the U.S. and China to reopen as the Covid-19 pandemic fades.

Helping the tone Friday was the news that President Joe Biden had agreed to a $579 billion infrastructure deal with a group of Democratic and Republican senators, paving the way for fresh investment in roads, bridges and broadband internet.

Additionally, Iran missed a deadline to renew its temporary atomic-monitoring pact with international inspectors, likely complicating negotiations between the Persian Gulf country and global powers, including the U.S., to revive its nuclear accord.

Without an agreement it’s extremely unlikely the U.S. will lift its current sanctions levied on Iran’s energy sector, stopping it from exporting its oil onto the global market.

Attention is now turning to next week’s meeting of the Organization of Petroleum Exporting Countries and allies, a group known as OPEC+, where they are set to discuss increasing supply once more to curb the rapid rise in crude prices.

“Anything less than 500Mbbls/d from OPEC+ would likely be enough to see the bulls push the market higher in the near term,” said analysts at ING, in a note. “The group will likely continue to take a cautious approach, and so we believe that there will be reluctance from some members to increase supply by more than the previously agreed 500Mbbls/d monthly limit.”

Ahead of that, traders will focus on the latest weekly update from Baker Hughes of the number of U.S. oil rigs, particularly with high crude prices making it more commercially viable for shale producers to return and steal market share.

Additionally, the CFTC will release its weekly commitments of traders report, a guide on how the market is positioned.