Oil prices fell on Friday as a stronger dollar and the possibility that OPEC+ will further increase its crude oil output weighed on market sentiment.
As of 4:33 GMT, Brent crude futures fell 0.51 percent to $64.11 a barrel. Meanwhile, U.S. West Texas Intermediate (WTI) crude futures dipped 0.56 percent to $60.86. Brent was down 2 percent so far this week, while WTI was 2.7 percent lower.
Oversupply concerns mount
Oil prices dipped further this week on reports that OPEC+ was considering another large production increase at a meeting on June 1. The reports revealed that increasing output by 411,000 barrels a day for July was among the options discussed, but no final agreement has yet been reached.
“Market sentiment continues to swing between concerns over rising global supply and fears about the potential economic fallout from ongoing global trade tensions,” stated Ole Hansen, head of commodity strategy, Saxo Bank.
A large crude oil build in the U.S. earlier in the week also weighed on oil prices. The Energy Information Administration said on Wednesday that U.S. crude and fuel inventories posted surprise stock builds last week as crude imports hit a six-week high and gasoline and distillate demand slipped. Crude inventories rose by 1.3 million barrels to 443.2 million barrels in the week ended May 16, the EIA said. Analysts had expected a 1.3 million-barrel decline.
Rising U.S. inventories have raised concerns, but some investors expect the summer driving season starting after Memorial Day weekend to make a dent in stocks, limiting further declines.
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U.S.-Iran talks in focus
Today, traders will closely watch the next round of Iran-U.S. talks, which will take place in Rome. Any signs of progress in talks might weigh on oil prices.
“In recent days, trader focus has increasingly shifted toward the Middle East. Volatility in the oil markets has been partly driven by speculation surrounding the Iran–U.S. nuclear negotiations. A successful outcome could pave the way for Iran to reintroduce more barrels into an already well-supplied global market, potentially putting some additional downward pressure on prices,” added Hansen.
Iran is the third-largest producer among members of the Organization of Petroleum Exporting Countries. The U.S. and Iran have held several rounds of talks this year over Iran’s nuclear program, while U.S. President Donald Trump has revived a campaign of stronger sanctions on the nation’s crude exports. Any signs of progress in nuclear talks might cap the upside for oil prices.
