Crude oil prices edged higher Friday, rebounding somewhat after overnight losses but still on course for their worst week since mid-March as worries over rising Covid-19 cases and the potential for additional supply weigh.
By 9:30 AM ET (1330 GMT), U.S. crude futures traded 0.4% higher at $71.92 a barrel, while the Brent contract rose 0.3% to $73.66.
U.S. Gasoline RBOB Futures were up 0.2% at $2.2545 a gallon.
Despite these gains the crude market is on course for a second consecutive weekly drop, with the Nymex contract down 3.5% over the week and the Brent contract down 2.4%.
Weighing on the market has been the rise in Covid-19 cases, primarily in southeast Asia from the highly-transmissible delta variant, which has resulted in new government mobility restrictions and the likelihood of a hit to growth expectations.
Earlier Friday, the Bank of Japan downgraded its real GDP forecast for 2021, now expecting growth of 3.8% compared with the 4.0% forecast it made in April, while Goldman Sachs (NYSE:GS) cut its 2021 growth forecasts for most of the countries in the region, citing the Covid-19 resurgence.
Adding to the downward pressure were reports that Saudi Arabia and the United Arab Emirates have resolved their disagreement, a move that could see a group of top producers, known as OPEC+, adding output to the global market.
Bloomberg reported that the UAE has been granted its desired new baseline of 3.65 million barrels a day for its production cuts, and it will now support a proposal from Saudi Arabia to extend the duration of the OPEC+ cuts agreement to December 2022.
Although this would result in extra crude hitting the global market, it would also end the uncertainty over supply levels that has weighed of late, particularly with most bodies seeing a tighter market over the next few months.
“Obviously, before we can see an agreement between all members, there would need to be another meeting,” analysts at ING said, in a note.
Later Friday, traders will study Baker Hughes drilling rig data and the Commodity Futures Trading Commission’s weekly data on the commitments of traders for clues as to future U.S. supply and the market’s positioning. Investing.com