Oil up more than 2%, heads for weekly gains ahead of OPEC+ decision

FILE PHOTO: Miniatures of oil barrels and a rising stock graph are seen in this illustration taken January 15, 2024. REUTERS/Dado Ruvic/Illustration/File Photo

By Nicole Jao

NEW YORK (Reuters) -Oil prices rose on Friday and were set for weekly gains as traders awaited an OPEC+ decision on supply agreements for the second quarter while also weighing fresh U.S., European and Chinese economic data.

Brent futures for May were up $1.68, or 2.05%, at $83.59 a barrel by 1:35 p.m. EST (1835 GMT). The April Brent futures contract expired on Feb. 29 at $83.62 a barrel.

U.S. West Texas Intermediate (WTI) for April rose $1.74, or 2.22%, to $80 a barrel.

For the week, Brent was set to rise around 2.4% following the switch in contract months, while WTI was on track to close 4.6% higher this week.

“The expectation that OPEC+ is going to continue with their voluntary production cuts well into the second quarter of 2024 is the main focus on the market,” said Andrew Lipow, president of Lipow Oil Associates.

A decision on extending OPEC+ cuts is expected in the first week of March, sources have said, with individual countries expected to announce their decisions.

“Sticking to the voluntary production cuts until the end of the year would be a strong signal and should therefore be seen as price-positive,” Commerzbank analyst Carsten Fritsch said.

A Reuters survey showed the Organization of the Petroleum Exporting Countries pumped 26.42 million barrels per day (bpd) in February, up 90,000 bpd from January.

Strong expectations of Saudi Arabia keeping term prices of crude it sells to Asian customers little changed in April from March levels also underpinned the market on Friday.

Meanwhile, geopolitical tension in the Red Sea also lifted prices on Friday, said Tim Snyder, an economist at Matador Economics.

The leader of Yemen’s Houthis said on Thursday the group would introduce military “surprises” in the region.

U.S. energy firms added oil and natural gas rigs for a second straight week, energy services firm Baker Hughes said in its closely followed report on Friday.

The oil rig count, an early indication of future output, rose by three to 506 this week, the highest since September.

On the demand side, Chinese manufacturing activity shrank for the fifth straight month in February, an official survey showed.

Euro zone inflation fell in February according to Eurostat, but both the headline figure and core inflation, which strips out volatile food and fuel prices, just missed analysts’ expectations.

Supporting prices, the U.S. personal consumption expenditures (PCE) index showed January inflation in line with economists’ expectations on Thursday, reinforcing market bets for a June interest rate cut.

(Reporting by Nicole Jao in New York, Robert Harvey in London, Laura Sanicola in Washington and Trixie Yap in Singapore; Editing by Jan Harvey, Kirsten Donovan, Emelia Sithole-Matarise and David Gregorio)