Oil futures were mixed Friday, but remained on track to notch a weekly gain on concerns surrounding the loss of crude supplies from Iran and Venezuela, as traders weighed the potential outcome of a meeting of major oil producers later this month.
“The prospect of further declines in Venezuela and Iran continues to bring support, even as momentum builds for a change in strategy by Saudi Arabia and Russia ahead of the upcoming OPEC summit,” said Robbie Fraser, commodity analyst at Schneider Electric.
The economic crisis in Venezuela is curtailing the country’s oil production, while the planned reinstatement of U.S. sanctions against Iran is expected to hit production from the third-largest member of the Organization of the Petroleum Exporting Countries.
U.S. benchmark July West Texas Intermediate crude CLN8, -0.65% added 20 cents, or 0.3%, to trade at $66.15 a barrel on the New York Mercantile Exchange, poised for a weekly gain of 0.5%. That would make the first weekly rise in three weeks. August Brent crude LCOQ8, -1.15% the global benchmark, shed 41 cents, or 0.5%, at $76.91 a barrel on the ICE Futures Europe exchange, trading up by less than 0.2% for the week.
OPEC is set to discuss the outlook for its production-cut deal with non-OPEC producers led by Russia that was implemented at the start of 2017.
In May, OPEC crude production fell for a fourth straight month, down 100,000 barrels a day from April to 31.9 million barrels a day — the lowest in over a year, according to a survey conducted by S&P Global Platts of industry officials, analysts and shipping data. The survey said outages from “troubles in Nigeria and Venezuela’s oil industries more than offset higher output from Saudi Arabia, Iraq and Algeria.
A report earlier this week, however, said the U.S. has requested that the oil cartel lift production by 1 million barrels to tamp down what has been a mostly strong rally in crude prices since late 2017. Year to date, Brent oil futures have climbed by roughly 15%.
“Crude oil [is] looking for direction from OPEC headlines ahead of the June 22 meeting,” wrote Robert Yawger, director at Mizuho Securities USA in a Friday research note.
“As it stands, the U.S. has asked OPEC to add 1 million barrels to global supply, but Iraq has made it known that a production increase is not on the table for the June 22 meeting. The truth is probably someplace in the middle, with Venezuelan and potentially Iranian production on the slide, and Russia eager to increase production,” he said.
Analysts have said that while U.S. shale is driving global oil-production growth, it wasn’t enough to offset supply issues elsewhere.
The U.S. Energy Information Administration forecasts the country’s production will rise to 10.7 million barrels a day on average in 2018, up from 9.4 million barrels a day last year.
Commerzbank estimates that to plug the growing supply gap, global production needs to be raised by more than the 300,000 barrels a day favored by swing producer Saudi Arabia.
Looking ahead, investors are awaiting a report from Baker Hughes BHGE, -1.28% on the number of rigs drilling for oil in the U.S. The count has climbed in each of the last two weeks.
Elsewhere in the energy complex, July gasoline RBN8, -0.29% fell 0.3% to $2.109 a gallon, with prices trading around 1.6% lower for the week, while July heating oil HON8, -0.46% lost 0.2% to $2.176 a gallon, little change from a week ago.
July natural gas NGN18, -1.64% was trading 1.4% lower at $2.891 per million British thermal units, on track for a weekly loss of around 2.4%.
—Sarah McFarlane contributed to this report