Oil settled higher on Friday, supported by expectations that OPEC’s decision to increase production targets by slightly more than planned will not add that much to global supply which should tighten as China eases COVID restrictions.
The Organization of the Petroleum Exporting Countries and allies, known as OPEC+, on Thursday agreed to boost output by 648,000 barrels per day (bpd) a month in July and August rather than 432,000 bpd as previously agreed.
Brent crude rose $2.11, to settle at $119.72 a barrel. U.S. West Texas Intermediate (WTI) crude advanced $2, to $118.87. Both benchmarks were up by $3 in after hours trading.
U.S. crude notched a sixth weekly gain on tight U.S. supply, which has prompted talk of fuel export curbs or a windfall tax on oil and gas producers.
The output hike could undershoot the pledged amount since OPEC+ divided the hike across its members and still included Russia, whose output is falling as sanctions have prompted some countries to avoid buying its oil since the invasion of Ukraine.
President Joe Biden publicly acknowledged that he may travel to Saudi Arabia soon, a trip multiple sources said was expected and could include talks with Saudi Crown Prince Mohammed bin Salman.
The visit would be aimed at bolstering U.S.-Saudi relations as Biden seeks ways to lower U.S. gasoline prices.
As recently as Wednesday, the White House said Biden still felt bin Salman was a “pariah” for what U.S. intelligence says was his role in the killing and dismembering of a political opponent, Washington Post journalist Jamal Khashoggi, in Turkey in 2018.
Supplies remain tight. On Thursday, a U.S. weekly inventory report showed crude stockpiles fell by a more-than-expected 5.1 million barrels. Gasoline inventories also dropped.