Oil Eyes Another Monthly Loss for July, But Holds Above $100 Pre-OPEC
2022.07.29 19:45
By Barani Krishnan
Investing.com — For the oil market, the fear of OPEC is greater than the fear of an implied U.S. recession.
U.S. crude returned above the key $100 per barrel the first time since July 20, joining Brent which has hovered above the three-digit mark almost throughout this week, amid concerns about what global oil producing alliance OPEC+ might do with output quotas when it holds its August meeting next week.
As trading for July headed to a close, New York-based West Texas Intermediate, or WTI, was headed for a monthly loss of almost 6%, after June’s 7.4% slide.
For the day and week though, WTI was up.
By 12:10 PM ET (16:10 GMT) on Friday, the U.S. crude benchmark was up $3.78, or almost 4%, to $100.20, after a session high at $101.87. For the week, WTI was up some 5.3%, after a decline of 13% over three preceding weeks.
London-traded Brent showed a decline of 3.7% for July, after June’s 5.7% drop.
For Friday itself, the global crude benchmark was up $3.18, or 3.1%, to $105.01.
For the week, it was about 1% higher, extending last week’s 2.7%. Prior to that, Brent had fallen a cumulative 17% over five weeks.
Oil’s rise on the day and week came as attention turned towards OPEC+’s Aug. 3 meeting, which will decide on the group’s September production.
Sources within the 23-nation OPEC+ told media on Friday that the alliance might hold production unchanged or raise it only slightly for September — despite arduous efforts by the Biden administration to cajole the Saudi-led and Russian-supported alliance in boosting output appreciably.
“All eyes are now on that meeting which will take place against the backdrop of lower economic growth forecasts, heightened recession risks and a U.S. economy that may or may not already be in recession, depending on who you’re talking to,” said Craig Erlam, analyst at online trading platform OANDA.
Oil prices took a tumble earlier in July on worries of an oncoming recession — confirmed this week by anemic second-quarter U.S. economic data.
The Commerce Department reported on Thursday that US GDP posted a negative 0.9% growth in the second quarter, after a contraction of 1.6% in the first quarter. The back-to-back negative quarters technically places the economy in a recession.
Separately, the Commerce Department said Friday that the Personal Consumption Expenditure Index — an inflation indicator closely followed by the Federal Reserve — grew 6.8% in the year to June after being dormant in two earlier months, intensifying the central bank’s fight against price growth.
US consumer sentiment, meanwhile, hovered near all-time highs towards end-July, the University of Michigan said in its closely-followed consumer poll on Friday. Consumer spending accounts for 70% of U.S. GDP.
