Oil prices fell in Asian trade on Friday as concern over global oversupply intensified after the head of oil producers’ cartel OPEC indicated there would be no cut-back in production, although a fall in the U.S. dollar put a floor under prices.
Brent is heading for its fifth weekly fall after prices shed gains early in the session and reversed into negative territory.
Suggesting there would be no reduction in oil output among member states, Abdullah al-Badri, secretary-general of the Organisation of the Petroleum Exporting Countries, said on Thursday that rising demand would prevent a further fall in oil prices.
Badri added that even if OPEC had cut output by as much as 2 million barrels per day (bpd), it would not have helped prices.
OPEC members produced around 31.25 million barrels per day in the second quarter, about 3 million more than daily demand, a Reuters survey showed this week.
Investors were waiting for the release of U.S. employment and eurozone wage and inflation data later on Friday, said Ben Le Brun, a market analyst at Sydney’s OptionsXpress.
The U.S. data could provide a further indication of whether the U.S. Federal Reserve will raise interest rates in September.
“Prices will be range-bound between now and the release of wage and wage inflation data,” Le Brun said.
The U.S. “wage inflation number is a key piece of the jigsaw in terms of (Fed chair) Janet Yellen’s interest rate puzzle”, he added.
Oil prices got some support from a weaker dollar. The dollar index fell against a basket of currencies in early Asian trade although it was still near one-week highs.
It touched those highs after data overnight showed U.S. gross domestic product expanded at a 2.3 percent annual rate in the second quarter. First-quarter data was revised to show 0.6 percent growth rather than a 0.2 percent contraction.
Investors were also digesting a decision by the U.S. Senate Energy Committee to approve a bill to lift a 40-year-old ban on crude oil exports, although it still faces an uphill battle in getting passed by the full Senate.