By Ahmad Ghaddar and Deep Kaushik Vakil
LONDON (Reuters) -Oil prices edged higher on Friday, but headed for their steepest weekly loss in three months as uncertainty about demand and high interest rates drove a sell-off limited by the prospect OPEC+ will continue to curb output.
futures for July rose 31 cents, or 0.4%, to $83.98 a barrel by 0755 GMT. U.S. West Texas Intermediate crude for June was up 26 cents, or 0.3%, to $79.21 per barrel.
Both benchmarks are set for weekly losses as investors are concerned higher-for-longer interest rates will curb economic growth in the U.S., the world’s leading oil consumer, as well as in other parts of the world.
Brent was on course for a 6.2% weekly decline, and WTI for a loss of 5.6% on the week.
“We view the commodities sell-off over the last two days as collateral damage from the Fed repricing and non-fundamental in nature,” JP Morgan analysts wrote in a note.
For further guidance, the market awaits U.S. economic data and indicators of future crude supply from the world’s top producer.
The U.S. Federal Reserve held interest rates steady this week, and flagged high inflation readings that could delay rate cuts.
Later on Friday, the U.S. Bureau of Labor Statistics will release its monthly nonfarm payroll report, a measure of the strength of the country’s job market the Fed takes into consideration when setting interest rates.
Higher rates typically weigh on the economy and can reduce oil demand.
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Also on Friday, energy services firm Baker Hughes is due to release its weekly count of oil and gas rigs, an indicator of future crude output. [RIG/U]
Geopolitical risk premiums due to the Israel-Hamas war, which has the potential to lead to oil supply disruption, have also faded as Israel and Hamas consider a temporary ceasefire and hold talks with international mediators.
Further ahead, the next meeting of OPEC+ oil producers – members of the Organization of the Petroleum Exporting Countries and allies including Russia – is set for June 1.
Three sources from the OPEC+ group said it could extend its voluntary oil output cuts of 2.2 million barrels per day beyond June if oil demand does not increase.
JP Morgan, which expects OPEC+ to extend cuts beyond June, said that a counter-seasonal rise in oil inventories last month would be a concern for the producer group.
“The stock builds in April will turn into draws in May through August and can push prices into the $90s in September,” the bank said.