Oil prices increased in European trade on Friday as investors focused on next week’s OPEC+ meeting, which is expected to deflate US hopes for a supply boost.
Brent oil futures for September delivery, which expire on Friday, rose $2.34 to $109.48 a barrel at 0933 GMT, the highest since July 5. The more active October contract was trading at $104.13, up $2.30.
West Texas Intermediate (WTI) oil futures in the United States increased $2.16 to $98.58 per barrel.
However, both contracts are likely to lose money for the second month in a row, falling 4.6 percent and 6.8 percent, respectively.
A lower dollar and higher shares also helped on Friday. When the value of the dollar falls, the price of oil falls for buyers using other currencies.
Global stocks (.MIWD00000PUS), which generally move in line with oil prices, were higher on hopes that monetary tightening in the United States will be less aggressive than first anticipated after poor growth statistics.
“It certainly feels like we are back in trade-off mode again, where sentiment is shifting between recessionary risks in H2 and a fundamentally undersupplied (oil) market,” said Stephen Innes, managing partner at SPI Asset Management.
Front-month Brent futures are trading at an increasing premium to later-loading months, signaling restricted current supplies, according to a market structure known as backwardation.
“The oil market in Europe is considerably tighter than in the U.S., which is also reflected in the sharply falling Brent forward curve,” said Commerzbank analyst Carsten Fritsch to Reuters..
The next meeting of the Organization of Petroleum Exporting Countries (OPEC) and its allies, headed by Russia, known as OPEC+, will be a crucial driver on Aug. 3.
According to OPEC+ sources, the club is considering keeping oil production steady in September, with two OPEC+ sources stating a slight increase is being explored.
A decision not to increase production would be a disappointment to the United States, which had hoped to reach an agreement with Saudi Arabia to open the taps earlier this month.
Analysts, on the other hand, believe that OPEC+ will struggle to increase supplies since several countries are already failing to fulfill output restrictions.