Oil up more than $2 a barrel as hopes of increased OPEC+ supply fade

Oil pump cylinders are seen at the Vaca Muerta shale oil and gas field in the Patagonian province of Neuquen, Argentina January 21, 2019. REUTERS/Agustin Marcarian/File Photo

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  • U.S. drillers add oil rigs for record 23rd consecutive month – Baker Hughes.
  • Brent high since July 5 above $110/bbl
  • Stocks rise, dollar weakens
  • OPEC+ sources say stable production is top of mind

NEW YORK, July 29 (Reuters) – Oil prices stabilized above $2 a barrel on Friday as attention turned to next week’s OPEC+ meeting and dimmed expectations of a imminent increase in supply by the group of producers.

Brent crude futures for September, which expire Friday, jumped more than $3 a barrel during the session, then pared gains to settle at $110.01 a barrel, up from $2.87 or 2.7%. The most active October contract rose $2.14, or 2.1%, to $103.97.

U.S. West Texas Intermediate (WTI) crude futures settled at $98.62 a barrel, up $2.20, or 2.3%, after jumping more than $5 on barrel.

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Both contracts recorded their second monthly losses, with Brent down around 4% for July and WTI down nearly 7%.

Oil pared some gains after the release of data from oil services firm Baker Hughes showed U.S. drillers added crude oil rigs for a record 23 straight months, indicating greater supply at come.

In July, the number of oil rigs rose by 11, rising for a record 23rd consecutive month, while the number of gas rigs remained unchanged after increasing for 10 consecutive months, according to data from Baker Hughes.

Stronger stock markets have supported oil, as has a weaker dollar, making oil cheaper for buyers of other currencies.

“These days there have been a lot of macro influences in the oil market, with the stock market making a nice rebound and a similar fall in the dollar fueling (today’s prices),” said John Kilduff, Partner at Again Capital LLC.

Global equities (.MIWD00000PUS), which often move in parallel with oil prices, were higher on hopes that disappointing growth figures would prompt the US Federal Reserve to ease its monetary tightening.

A Reuters survey predicts Brent will average $105.75 a barrel this year, with U.S. crude averaging $101.28. find out more OILPOLL

First-month Brent futures are selling at a rising premium to later loading months, a market structure known as a pullback, indicating a tight current supply.

“The oil market in Europe is considerably tighter than in the United States, which is also reflected in the sharp drop in the Brent futures curve,” said Carsten Fritsch, an analyst at Commerzbank.

Investors will then watch the Aug. 3 meeting of the Organization of the Petroleum Exporting Countries (OPEC) and its Russia-led allies, known as OPEC+.

OPEC+ sources said the group would consider keeping oil output unchanged for September, with two saying a modest increase would be discussed. Read more

A decision not to increase production would disappoint the United States after President Joe Biden visited Saudi Arabia this month in hopes of a deal to open the taps. Read more

Analysts said it would be difficult for OPEC+ to increase supply, given that many producers are already struggling to meet production quotas.

OPEC+’s compliance with oil production cut pledges reached 320% in June, Russian news agency Interfax reported, citing a source familiar with the data. He said the group’s combined oil underproduction was 2.84 million barrels per day last month. Read more

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Additional reporting by Shadia Nasralla, Sonali Paul in Melbourne and Jeslyn Lerh in Singapore Editing by David Goodman, Louise Heavens, David Gregorio and Diane Craft

Our standards: The Thomson Reuters Trust Principles.

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