By Nicole Jao

NEW YORK (Reuters) -Oil prices fell on Friday and posted a weekly loss as investors awaited an OPEC+ meeting on Sunday that will determine the fate of the producer group’s output cuts.

futures for July delivery were down 24 cents, or 0.3%, to $81.62 a barrel, while the more liquid August contract was down 77 cents, or 0.8%, at $81.11. U.S. West Texas Intermediate (WTI) crude futures fell 92 cents, or 1.2%, at $76.99.

For the week, Brent settled down 0.6%, with WTI posted a 1% loss.

“It’s the trepidation ahead of the OPEC meeting over the weekend,” said Matt Smith, lead analyst at Kpler, referencing the potential for the group to do something unexpected. “It’s widely expected that they’ll roll over the cuts,” he added.

Markets are awaiting the OPEC+ meeting on Sunday, with the producer group working on a complex deal that would allow it to extend some of its deep oil production cuts into 2025, sources told Reuters.

Saudi Arabia invited ministers to gather in person in Riyadt for the June meeting in a last minute change of plans, sources said on Friday. The gathering is still officially scheduled as an online meeting.

production rose in March to its highest level this year, data from the U.S. Energy Information Administration (EIA) showed on Friday, while fuel product supplied, a proxy for demand, fell 0.4% to 19.9 million barrels per day.

The oil market has been under pressure in recent weeks over the prospect of U.S. borrowing costs staying higher for longer, which ties down funds and can curb oil demand.

Both oil benchmarks were on course for their biggest monthly declines since December after dropping in the previous session on a surprise build in U.S. fuel inventories.

“U.S. summer travel season kicked off with Memorial Day weekend, with initial indications showing strong driving and flying activity — but fuel use looks more muted, implying efficiency gains,” Citi analysts wrote in a note.

Oil prices rose briefly after U.S. government data showed inflation tracked sideways in April, strengthening traders’ bets that the Fed would deliver a long-awaited rate cut in September.

Euro zone inflation rose more than expected in May, Eurostat data showed. The increase is unlikely to deter the European Central Bank from cutting borrowing costs next week, but it could slow the rate cutting cycle.

U.S. energy firms held oil and gas rig count – an early indicator of future output – steady at 600 in the week to May 31, energy services firm Baker Hughes said in its closely followed report on Friday.

Oil rigs fell by one to 496 this week, while gas rigs rose by one to 100.

However, the total rig count fell for the third month in a row in May, dropping by 13, the most in a month since August.​

Money managers raised their net long U.S. crude futures and options positions in the week to May 28, the U.S. Commodity Futures Trading Commission (CFTC) said on Friday.

Investing.com– Oil prices slipped to weekly loss after settling lower Friday, as fresh hopes on a Gaza ceasefire and ongoing demand concerns weighed on sentiment ahead of the weekend’s meeting of top crude producers.

At 14:08 ET (18:08 GMT),  fell 0.3% to $81.62 a barrel, while fell 1.2% to $76.99 a barrel.

Hamas-Israel truce back in focus

Israel agreed to a deal that would lead to a “lasting” ceasefire in the Gaza Strip, US President Joe Biden said Friday, referring to a three-phase ceasefire proposal. 

The first phase, lasting six weeks, calls for complete ceasefire, and the withdrawal of Israeli forces from all populated areas of Gaza. The second phase seeks to end hostilities in Gaza permanently as well as the withdrawal of Israeli forces from the territory and would see the release of all remaining living hostages in Gaza. The final phase of the deal, meanwhile, involves a reconstruction plan for Gaza.

It remains to seen, however, whether Hamas will accept the proposal.

The news eased Middle East tensions, helping to further cool bets on a oil supply-risk premium in the region. 

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.

Baker Hughes rig count falls 

The number of oil rigs operating in the U.S. fell to 496 from 497, according to data Friday from energy services firm Baker Hughes.  

The fall in rig count comes as concerns about weaker demand resurfaced following data Thursday pointing to weaker gasoline demand.   

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. 

Dollar flat as inflation data meet expectations 

The dollar was steady, doing little to help spark a bid in crude, as showing the core personal consumption expenditures (PCE) price index, the Fed’s preferred gauge of inflation, rose 2.8% in April, unchanged from a month earlier, matching investor expectations. 

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. 

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.

The meeting will now be live rather than virtual adding to optimism that the group will likely agree to extend production curbs. 

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.

(Peter Nurse, Ambar Warrick contributed to this article.)

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.)