Oil Finishes Down on Possible OPEC+ Output Hike

Doha, Qatar: US crude futures fell on Friday as traders expected OPEC+ would decide on Saturday to boost oil output for July beyond previous forecasts. 

Brent crude futures settled down 25 cents, or 0.39%, at $63.90 a barrel, noted Al-Attiyah Foundation in its Weekly Energy Market Review. 

US West Texas Intermediate crude finished down 15 cents, or 0.25%, at $60.79 a barrel, having earlier dropped more than $1 a barrel.

The Brent July futures contract is due to expire on Friday. At these levels, the front-month benchmark contracts were headed for weekly losses over 1%. 

Prices dipped into negative territory after Reuters reported that OPEC+ may discuss an increase in July output larger than the 411,000 barrels per day (bpd) rise that the group decided on for May and June. 

The potential OPEC+ output hike comes as the global surplus has widened to 2.2 million bpd, likely necessitating a price adjustment to prompt a supply-side response and restore balance, said JPMorgan analysts in a note, adding that they expected prices to remain within the current range before easing into the high $50s by year-end. 

Analysts said that an online post on Truth Social by US President Donald Trump that seemed to threaten more changes in tariff levels for Chinese imports also put pressure on crude prices.

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.

Asian spot liquefied natural gas (LNG) prices were flat last week after three weeks of gains, as low demand from Asian buyers and increased supply in Europe capped gains. 

The average LNG price for July delivery into north-east Asia was at $12.40 per million British thermal units (mmBtu), industry sources estimated.

 

Despite extremely weak production at Malaysia’s Bintulu export terminal, which had been undergoing maintenance and delaying shipments, demand in Asia has also been soft with limited appetite last week. 

Analysts noted that LNG prices remain out of reach for price-sensitive buyers in Asia, with limited requirements posted last week, resulting in muted buying interest. Most of the current demand appears to be driven by trading houses and portfolio majors rather than end-users. 

However, analysts indicated that a price decline of around $1 per mmBtu could stimulate renewed interest from Asian buyers.

 

While the arbitrage window for US-sourced LNG to Asia is currently closed when accounting for full shipping costs, the arbitrage opportunity for Nigerian supply remains open, potentially offering a more attractive option for buyers in the region. 

In Europe, improving renewable energy supply, coupled with recovering pipeline gas flows from Norway to the continent, has worked in tandem with an influx of LNG to meet current demand across Europe. Despite these developments, European demand remains relatively sluggish.