LONDON: Oil prices held steady on Friday as investors awaited U.S. inflation data for clues on the demand outlook before turning attention to Sunday’s OPEC+ meeting to determine the state of supply into next year.
Brent futures for July delivery were down 44 cents, or 0.5%, at $81.42 a barrel by 1026 GMT while the more liquid August futures were up 8 cents at $81.96.
The spread between the two contracts hit an 11-month low, entering contango for the first time this year.
U.S. West Texas Intermediate (WTI) crude was down 3 cents at $77.88.
Brent is on course for a monthly loss of about 7% after dropping in the previous session on a surprise build in U.S. fuel inventories.
Higher refinery utilisation brought a deeper than expected draw in crude oil stocks in the week to May 24, Energy Information Administration (EIA) data showed.
However, gasoline inventories rose by 2 million barrels, against expectations of a 400,000 barrel draw and higher demand ahead of the Memorial Day weekend.
Oil falls as US reports surprise fuel build, weak demand
“U.S. summer travel season kicked off with Memorial Day weekend, with initial indications showing strong driving and flying activity — but fuel use looks more muted, implying efficiency gains,” Citi analysts wrote in a note.
In the euro zone, inflation rose by 2.6% in May, Eurostat data showed, beating the 2.5% expected by economists polled by Reuters.
The increase is unlikely to deter the European Central Bank from cutting borrowing costs next week, but it could slow the rate-cutting cycle in the coming months.
The oil market has been under pressure in recent weeks over the prospect of borrowing costs staying higher for longer, which ties down funds and can curb oil demand.
U.S. inflation data is due to be released at 1230 GMT.?
Markets are also awaiting the OPEC+ meeting on Sunday, with the producer group working on a complex deal that would allow it to extend some of its deep oil production cuts into 2025, said three sources familiar with OPEC+ discussions.
“The probable extension of the voluntary production cuts by OPEC+ should cause oil prices to rise again,” Commerzbank analysts said. “Ultimately, this would threaten a significant undersupply on the oil market in the third quarter.”