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Oil Prices Mixed, U.S Crude and Gasoline Inventories Headed for a Weekly Decline

Oil prices were mixed on Friday after a boost from a drop in U.S. crude and gasoline inventories but were still set for a weekly decline on concerns that an OPEC+ impasse could swell global crude supplies.

Brent crude oil futures were down 9 cents, or 0.1%, at $74.03 a barrel by 0140 GMT.

U.S. West Texas Intermediate futures were up 1 cent at $72.95 a barrel.

oil chart
U.S WTI Index Performance Chart

Both benchmarks were headed for a loss of nearly 3% for the week, as traders remained worried that the collapse of talks between the Organization of the Petroleum Exporting Countries and allies including Russia, a group known as OPEC+, could lead to a rise in crude supplies.

“A large decline in the U.S. stockpile reinforced views that fuel demand was growing as the U.S. driving season has begun. Since there has not been any major lift in the U.S. shale output, some investors became bullish despite the OPEC+ spat,” Hiroyuki Kikukawa, general manager of research at Nissan Securities.

U.S. crude and gasoline stocks fell and gasoline demand reached its highest since 2019, the U.S. Energy Information Administration said on Thursday, signalling increasing strength in the U.S. economy.

Crude inventories fell by 6.9 million barrels in the week to July 2 to 445.5 million barrels, the lowest since February 2020, and more than the expected 4 million-barrel drop estimated in a Reuters poll. Gasoline stocks fell by 6.1 million barrels, exceeding expectations for a 2.2 million barrel drop.

Even with oil prices rising toward $75 a barrel, U.S. shale producers are keeping their pledges to hold the line on spending and keep output flat, a departure from previous boom cycles.

Still, some traders feared members of the OPEC+ group could be tempted to abandon output limits that they have followed during the pandemic due to the breakdown in discussions between major oil producers Saudi Arabia and the United Arab Emirates.

The two Gulf OPEC allies are at odds over a proposed deal that would have brought more oil to the market.

Russia was trying to mediate to help strike a deal to raise output, OPEC+ sources said on Wednesday. The United States had high-level conversations with officials in Saudi Arabia and the UAE, the White House said on Tuesday.

Read also; Oil Prices Edge Lower, Investors Seek Clarity on OPEC+