Brent crude oil prices were little changed in early trading on Friday, but were set to notch their first monthly gain this year as a steep drawdown in oil stocks and OPEC+ plans to cut output outweighed demand fears stemming from rising interest rates.
Brent crude futures for September delivery fell 19 cents, or 0.3%, to $74.32 at 0015 GMT. The less-traded front month contract, which expires on Friday, was down 12 cents at $74.22.
U.S. West Texas Intermediate crude (WTI) was down 21 cents, or 0.3%, to $69.65.
Both benchmarks settled marginally higher on Thursday and were on track to gain more than 2% for the month.
Markets have worried about tightening supply after the U.S. Energy Information Administration (EIA) said crude inventories dropped by 9.6 million barrels in the week ended June 23, far exceeding the 1.8-million-barrel draw analysts had forecast in a Reuters poll.
That followed Saudi Arabia’s plans to cut its output by 1 million barrels per day from July and a broader OPEC+ deal to limit supply into 2024.
Gains early on Friday, however, were capped by fears of interest rate hikes. The Federal Reserve is likely to resume its rate-hike campaign after a break earlier this month, Fed Chair Jerome Powell signaled on Thursday, as a fresh slew of stronger-than-expected U.S. economic data underscored why more monetary tightening is likely needed to curb inflation.
Markets also awaited China’s purchasing managers index reports, which will give a first glimpse into how the factory and services sectors in the region’s largest economy fared in June. Much depends on whether Chinese oil demand picks up in the second half.
U.S. oil rig count data, an indicator of future supply, will also be released later in the day.