The crude oil market was down on Friday as traders expected the Organisation of the Petroleum Exporting Countries and its allies (OPEC+) would decide on Saturday to increase output for July beyond previous forecasts.
Brent crude futures lost 25 cents or 0.39 per cent to close at $63.90 per barrel and the US West Texas Intermediate (WTI) crude futures declined by 15 cents or 0.25 per cent to $60.79 a barrel.
OPEC+ may discuss an increase in July output larger than the 411,000 barrels per day rise that the group decided on for May and June.
Eight OPEC+ countries have been increasing output more rapidly than initially planned, despite the extra supply pressuring prices.
The strategy of group leaders Saudi Arabia and Russia is partly to punish over-producing allies and to win back market share.
However, there are fears that this may cause a rift as Kazakhstan said in a statement on Thursday that it won’t cut production.
Reuters reported that this has sparked debate in OPEC+, citing unnamed sources, with one saying that this factor may tilt discussions towards a larger output hike on Saturday.
Kazakhstan has been pumping hundreds of thousands of barrels over its OPEC+ target for months, a factor that has angered other OPEC+ members and helped sway a decision by the group to proceed with plans to hike output in April.
Meanwhile, the United Arab Emirates Energy (UAE) said OPEC+ was doing its best to balance the oil market and needed to be mindful of rising demand.
The potential OPEC+ output hike comes as the global surplus has widened to 2.2 million barrels per day, likely necessitating a price adjustment to prompt a supply-side response and restore balance.
US President Donald Trump that seemed to threaten more changes in tariff levels for Chinese imports also put pressure on crude prices.
President Trump’s tariffs were expected to remain in effect after a federal appeals court temporarily reinstated them on Thursday, reversing a trade court’s decision a day earlier to put an immediate block on the sweeping duties.
Also, Baker Hughes said US energy firms this week cut the number of oil and natural gas rigs operating for a fifth week in a row to the lowest since November 2021.