Investing.com– Oil prices steadied Friday, ahead of the release of key U.S. inflation data and the weekend’s meeting of top crude producers.

At 05:15 ET (09:15 GMT),  rose 0.2% to $82.05 a barrel, while rose 0.1% to $78.00 a barrel.

China PMIs disappoint, add to demand fears

Purchasing managers index data showed on Friday that Chinese manufacturing activity unexpectedly shrank in May, while non-manufacturing activity grew at a slower-than-expected pace.

The readings indicated that Chinese business activity was cooling after a brief rebound over the past two months, and ramped up concerns over sluggish demand in the world’s biggest oil importer.

The data also indicated that bumper stimulus measures from Beijing had so far provided only limited support for the Chinese economy, and that more supportive measures were needed.

US inventories fall, but product build drives demand jitters 

The crude market saw mixed news from the weekly supply data from the U.S. Energy information Administration, released Thursday, a day later than usual after the Memorial Day holiday. 

U.S. saw a bigger-than-expected draw in the week to May 24 – at nearly 4.2 million barrels against expectations of 1.6 mb.

But grew 2 mb, more than expectations for a build of 1 mb, while grew 2.5 mb against expectations for a build of 0.4 mb. 

The builds in the product inventories raised concerns that demand in the world’s biggest fuel consumer was sluggish going into the travel-heavy summer season. 

While travel is set to increase in the next two months, it could grow less than expected amid demand headwinds from sticky inflation, high interest rates and cooling economic growth.

Fears of slowing U.S. economic growth rose on Thursday after a revised reading showed the U.S. economy grew less than initially expected in the first quarter.

However, many Fed officials have cautioned against expecting rate cuts in the near future as inflation remains elevated.  

US PCE index due

This turns the focus turn squarely towards upcoming data, which is the Federal Reserve’s preferred inflation gauge.

The reading is due later on Friday and is widely expected to factor into the central bank’s outlook on interest rate cuts. 

Fears of high-for-longer U.S. interest rates have been a key weight on oil prices in recent sessions, amid growing concerns that high rates will dent economic activity in the coming months, stymying oil demand. 

Inflation data out of Europe offered an upside surprise earlier Friday, as eurozone CPI rose 2.6% on an annual basis in May, above the 2.4% seen the month before.

Additionally core CPI, which excludes volatile food and energy prices, rose 2.9% annually, above April’s 2.7%. 

OPEC+ meets over weekend

Also in the spotlight is an upcoming meeting of the Organization of Petroleum Exporting Countries and allies, known at OPEC+, with the cartel set to discuss future production levels.

The group is currently cutting output by 5.86 million barrels per day, equal to about 5.7% of global demand.

OPEC+ is working on a complex deal to be agreed at its meeting on Sunday that would allow the group to extend some of its deep oil production cuts into 2025, Reuters reported, citing sources.

(Ambar Warrick contributed to this article.)