Oil prices edged higher on Friday as markets shrugged off the decision of OPEC+ to increase production and questioned whether the incremental output would make up for lost Russian supply and meet China’s growing demand amid easing COVID restrictions.
U.S. West Texas Intermediate (WTI) crude futures gained 7 cents to $116.94 a barrel, while Brent crude futures were up 18 cents at $117.79 a barrel.
A decision on Thursday by the Organization of the Petroleum Exporting Countries and allies, together called OPEC+, to boost output by 648,000 barrels per day (bpd) in July and August, instead of by 432,000 bpd as previously agreed, was seen as hardly enough for a tight market.
Although Brent was on track to fall for the week, U.S. crude was heading for 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.
Still, expectations that supply will stay tight limited losses. OPEC+ divided the hike across its members and still included Russia, whose output is falling due to sanctions and some buyers avoiding its oil over the invasion of Ukraine, suggesting the boost will undershoot.
A weekly inventory report on Thursday showed U.S. crude stockpiles fell by a more-than-expected 5.1 million barrels and gasoline inventories also dropped, underlining the tight supply.
Support also came from rising demand. With daily COVID-19 cases falling, China’s financial hub Shanghai and capital, Beijing, have relaxed COVID-19 restrictions this week. The Chinese government has vowed support to stimulate the economy.
In focus later on Friday will be U.S. employment data for May. Investors are looking to the report for confirmation of a slowdown in the job market, which could convince the Federal Reserve to go slow on interest rate hikes.