HOUSTON: Oil prices retreated on Friday as investors weighed expectations of a rise in OPEC+ supply starting in October, alongside dwindling hopes of a hefty US interest rate cut next month, following data showing strong consumer spending.
Brent crude futures for October delivery, which expire on Friday, settled $1.14 lower, or 1.43%, at $78.80 a barrel, marking a decline of 0.3% for the week and 2.4% for the month.
US West Texas Intermediate crude futures settled down $2.36, or 3.11%, to $73.55, a drop of 1.7% in the week and a 3.6% decline in August. The Organization of the Petroleum Exporting Countries and allies, known as OPEC+, is set to proceed with a planned oil output hike from October, as the Libyan outages and pledged cuts by some members to compensate for overproduction counter the impact of sluggish demand, six sources from the producer group told Reuters.
“OPEC+ talking about going ahead with tapering off production cuts was the headline that really sunk us today,” said Phil Flynn, analyst with Price Futures Group.
Meanwhile, investors responded to new data that showed US consumer spending increased solidly in July, suggesting the economy remained on firmer ground early in the third quarter and arguing against a half-percentage-point interest rate cut from the Federal Reserve next month.
Lower rates can boost economic growth and demand for oil. “That modest inflation increase could basically solidify that we will only get a quarter percentage-point cut and those hoping for a half will have to wait,” said Price Futures Group’s Flynn.
Elsewhere, Libya’s National Oil Corporation said recent oilfield closures have caused the loss of approximately 63% of the country’s total oil production, as a conflict between rival eastern and western factions continues.
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