Oil Has Another Monthly Loss for July, Bulls Hedge on OPEC Meet

By Barani Krishnan

Investing.com -- For the oil market, the fear of OPEC is greater than the fear of an implied U.S. recession.

U.S. crude rose for a third time this week but still settled below the key $100 per barrel level while Brent remained above the three-digit mark amid concerns about what global oil producing alliance OPEC+ might do with output quotas when it holds its August meeting next week.

As trading for July closed, New York-based West Texas Intermediate, or WTI, posted a monthly loss of 7.2%, after June’s 7.4% slide. 

For the day and week though, WTI was up.

The U.S. crude benchmark settled Friday's session up $2.20, or 2.3%, at $98.62 for its September delivery contract. For the week, September WTI was up 4.1%, after a decline of 13% over three preceding weeks.

London-traded Brent for October delivery showed a decline of about 4.5% for July, after June’s 5.7% drop.

For Friday itself, the global crude benchmark settled up $2.14, or 2.1%, at $103.97.

For the week, October Brent was up 5.7%, extending last week’s 2.7%. Prior to that, Brent had fallen a cumulative 17% over five weeks.

Oil’s rise on the day and week came as attention turned towards OPEC+’s  Aug. 3 meeting, which will decide on the group’s September production. 

Sources within the 23-nation OPEC+ told media on Friday that the alliance might hold production unchanged or raise it only slightly for September — despite arduous efforts by the Biden administration to cajole the Saudi-led and Russian-supported alliance in boosting output appreciably.

“All eyes are now on that meeting which will take place against the backdrop of lower economic growth forecasts, heightened recession risks and a U.S. economy that may or may not already be in recession, depending on who you're talking to,” said Craig Erlam, analyst at online trading platform OANDA.

Oil prices took a tumble earlier in July on worries of an oncoming recession — confirmed this week by anemic second-quarter U.S. economic data.

The Commerce Department reported on Thursday that US GDP posted a negative 0.9% growth in the second quarter, after a contraction of 1.6% in the first quarter. The back-to-back negative quarters technically places the economy in a recession. 

Separately, the Commerce Department said Friday that the Personal Consumption Expenditure Index   — an inflation indicator closely followed by the Federal Reserve — grew 6.8% in the year to June after being dormant in two earlier months, intensifying the central bank’s fight against price growth.

US consumer sentiment, meanwhile, hovered near all-time lows towards end-July, the University of Michigan said in its closely-followed consumer poll on Friday. Consumer spending accounts for 70% of U.S. GDP.