© Reuters. FILE PHOTO: Oil pump jacks are seen at the Vaca Muerta shale oil and gas deposit in Argentina’s Neuquen Patagonia province on January 21, 2019. REUTERS/Agustin Marcarian/File Photo
NEW YORK (Reuters) – Oil prices rose nearly $3 a barrel on Friday as attention turned to next week’s OPEC+ meeting and waning expectations that the group of producers will increase supply.
September-settled futures, due to expire Friday, rose $2.79, or 2.6%, to trade at 12:10 p.m. ET (1710 GMT) after hitting their highest since July 5. $109.93 a barrel. The more active October contract was up $2.25, or 2.2 percent, at $104.11.
U.S. West Texas Intermediate (WTI) crude futures rose $2.79, or 3%, to $99.21 a barrel.
Oil prices pared some of their gains after data from oil services firm Baker Hughes showed that U.S. drillers added a record number of oil rigs for the 23rd straight month, signaling higher supply ahead. [RIG/U]
The number of U.S. natural gas rigs rose by two to 157 in the week to July 29, while the number of oil-oriented rigs rose by six to 605, Baker Hughes data showed.
Both contracts were set for weekly gains, but were also on track for a second straight monthly decline, with Brent down 4% for July and WTI down 6%.
Oil was underpinned by stronger equities on Friday, as did a weaker U.S. dollar, making it cheaper for buyers holding other currencies.
“There’s been a lot of macro impact in the oil market these days, the stock market has had a nice rally, and the dollar has had a similar fall, which has led to (today’s prices),” said John Kilduff, partner at Again Capital LLC Say.
Global stock markets typically rose in tandem with oil prices on hopes that disappointing growth data will encourage the Federal Reserve to ease monetary tightening. [MKTS/GLOB]
A Reuters poll forecast Brent crude will average $105.75 a barrel this year, with an average of $101.28 a barrel. [OILPOLL]
Front-month Brent crude futures are trading at a premium to later-month prices, a market structure known as backwardation, an indication of current supply constraints.
Commerzbank (ETR:) analyst Carsten Fritsch said: “The oil market in Europe is much tighter than in the US, which is also reflected in the sharp decline in the Brent forward curve.”
Investors will be focusing on the next meeting of the Organization of the Petroleum Exporting Countries (OPEC) and allies led by Russia, collectively known as OPEC+, on Aug. 3.
OPEC+ sources said the group would consider keeping oil output unchanged in September, with two of them saying they would discuss a modest increase in output.
The decision not to raise output will disappoint the United States after President Joe Biden visited Saudi Arabia this month in hopes of a deal to turn on the tap.
Analysts said it would be difficult for OPEC+ to increase supply given that many producers are already struggling to meet production quotas.
Russia’s Interfax news agency, citing a source familiar with the data, said OPEC+’s compliance with its oil production cut commitments reached 320 percent in June. It said the group’s total oil production last month was less than 2.84 million barrels per day.