Oil Price Steadies After Report Of Planned OPEC+ August Output Hike

Doha, Qatar: Oil prices edged up slightly on Friday, recovering from a midday drop into negative territory following a report that OPEC+ was planning to hike production in August, but tumbled about 12% in the week in their biggest drop since March 2023, noted Al-Attiyah Foundation in its Weekly Energy Market Review.

Brent crude futures settled at $67.77 a barrel, up 4 cents, or 0.1%. US West Texas Intermediate crude finished up 28 cents, or 0.4%, at $65.52 a barrel. Four delegates from OPEC+, which includes allies of the Organization of the Petroleum Exporting Countries, said the group was set to boost production by 411,000 barrels per day in August, following a similar-size output increase already planned for July.

During the 12-day war that started after Israel targeted Iran's nuclear facilities on June 13, Brent prices rose briefly to above $80 a barrel before slumping to $67 a barrel after US President Donald Trump announced an Iran-Israel ceasefire. Prices had also been supported earlier in Friday's session by multiple oil inventory reports that showed strong draws in middle distillates.

US government data on Wednesday showed crude oil and fuel inventories fell last week, with refining activity and demand rising. Additionally, China's Iranian oil imports surged in June as shipments accelerated before the Israel-Iran conflict and demand from independent refineries improved. China is the world's top oil importer and biggest buyer of Iranian crude. It bought more than 1.8 million bpd of Iranian crude from June 1-20.

Asian spot liquefied natural gas (LNG) prices fell last week from a four-month high as a ceasefire between Israel and Iran reduced the risk of supply disruption. The average LNG price for August delivery into north-east Asia was at $13.10 per million British thermal units (mmBtu), down from $14.00 per mmBtu last week, which was the highest level since February 21, industry sources estimated.

Asian prices premiums to Europe have risen over the past week despite the risk of the Strait of Hormuz being closed falling but a rise in charter rates in the Atlantic basin has curbed a swathe of mid-Atlantic diversions. The focus has shifted therefore back to weather developments, with increased gas demand expected due to warmer weather in Europe.

A steady flow of LNG cargoes and healthy pipeline gas supply are meeting power generation needs and contributing to the replenishment of Europe's underground gas storage ahead of winter. In the US market, outlook for Henry Hub prices remains bearish as traders are looking past the current heatwave and focusing on a milder early July forecast.

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