Oil futures: Brent poised to end week down 2% as bulls flee on OPEC+, US
Quantum Commodity Intelligence – Futures experienced another turbulent day on Friday, as Brent recovered from a six-session low in late afternoon trade, but was still poised for a weekly Friday-to-Friday drop of 2% on uncertainty oversupply.
Front-month September Brent futures were trading at $73.77/barrel (1600 GMT), up from Thursday's settle of $73.47/b, but down from last Friday's close of $75.55/b.
It had traded at a low of $72.34/b earlier in the day before meeting technical resistance.
At the same time, August WTI was trading at $71.95/b, also down from Thursday's settle of $71.65/b and last Friday's close of $74.56/b.
It had traded at a low of $70.41/b earlier in the day.
Markets have trended lower since Wednesday's US oil inventory report showed total oil product stocks built 2.5 million barrels last week despite a small drop in refinery utilization rates and healthy product exports.
The stock data followed reports that Saudi Arabia and the UAE had resolved differences over baseline production levels, triggering a sell-off as bulls exited the market.
"Following news earlier this week that Saudi Arabia and UAE had ironed out differences on the new supply agreement, bullish investors liquidated their positions," said Daniel Hynes, senior commodity strategist at ANZ.
However, the Saudi/UAE arrangement is only the first step in unlocking the proposed 400,000 bpd month increases in August, which in turn was the first tranche of an additional 2 million bpd planned by year-end.
Saudi is reportedly backing UAE for a baseline production level of 3.65 million bpd, but that would need support from the full OPEC+ group and may lead to calls for higher quotas from other producers in a position to raise output.
"It appears to have opened a can of worms, with Iraq suggesting it deserves a higher quota as well," noted ANZ's Hynes.
Market watchers say in practical terms it's too late to activate production increases in time for the August program, but if there is an agreement by the end of the month then OPEC+ could implement a higher increase the following month.
The group is expected to hold talks later in July, but no date has been confirmed so far.
