Oil prices were roughly unchanged on Friday, clinging to gains made in the previous session on doubts that producers belonging to OPEC+ can hike their crude output enough to make up for lost supply from Russia.
U.S. West Texas Intermediate (WTI) crude oil futures were up 1 cent at $116.88 a barrel at 0112 GMT, while Brent crude futures were up 7 cents at $117.68 a barrel.
A decision on Thursday by the Organization of the Petroleum Exporting Countries and allies, together called OPEC+, to boost output of crude oil by 648,000 barrels per day (BPD) in July and August, instead of by 432,000 BPD as previously agreed, was seen as hardly enough for a tight market.
The increases were divided proportionally across the member countries, but with Russia included in the pact and members like Angola and Nigeria already failing to meet their existing crude oil targets, analysts said the supply increase was likely to be less than the announced volume.
“The fact that Russia was left in the group suggests that production from the alliance will continue to struggle to meet even this modest increase in quota rises,” ANZ Research analysts said in a note.
Russian crude oil output has already dropped by 1 million BPD since its invasion of Ukraine, which Moscow calls a “special operation”, and is likely to fall even further as the European Union’s ban on Russian oil kicks in, ANZ analysts said.
Oil Prices Steady Amidst EU Russia Ban.
“To put it another way, traders think the incremental increase is too small relative to the growing downside supply risks from the EU embargo amid an expected increased demand from China,” said SPI Asset Management Managing Partner Stephen Innes.
Although Brent crude was on track to fall for the week, WTI was on course for a 1.6% weekly gain as U.S. supply is seen as very tight, prompting talk of fuel export curbs or a windfall profits tax on oil and gas producers.
Government data on Thursday showed U.S. crude stockpiles fell much more than expected in the week to May 27 and gasoline inventories fell, defying expectations for an increase.