Oil prices fell on Friday, with weak demand in focus after the OPEC+ group delayed a planned increase in supplies and extended deep production cuts until the end of 2026.

Brent crude futures were down 20 cents, or 0.3%, at $71.89 a barrel by 0910 GMT. U.S. West Texas Intermediate crude futures were down 14 cents, or 0.2%, at $68.16 a barrel.

For the week, Brent was on track to fall 1.5%, while WTI was on track to gain 0.2%.

The Organization of the Petroleum Exporting Countries and its allies on Thursday delayed the start of oil output increases by three months to April and extended a full phase-out of production cuts by a year to the end of 2026.

The group, known as OPEC+ and responsible for about half of the world's oil output, had planned to begin winding down production cuts in October 2024, but slowing global demand — particularly in China — and rising output elsewhere have forced it to postpone the plan several times.

"The outcome of the last OPEC+ meeting surprised us positively… The extension of the production cuts shows that the group remains united and still aims to keep the oil market balanced," said UBS analyst Giovanni Staunovo.

Contrary to market expectations, UBS expects falling oil inventories this year and a balanced market in 2025 to support prices in the coming months, Staunovo added. UBS expects Brent to average $80 next year.

Brent has largely held within a tight range of $70-75 a barrel in the past month, as investors weigh weak demand signals in China and rising geopolitical risks in the Middle East.

"The general narrative is that the market is stuck in a rather narrow range. While immediate developments may push it out of this range on an upwards basis temporarily, the medium-term outlook remains rather pessimistic," said PVM analyst Tamas Varga.

Morgan Stanley (NYSE:MS) raised its Brent price forecast to $70 a barrel for the second half of 2025, from $66-68 a barrel, noting that the renewed OPEC+ production agreement tightens its supply and demand outlook, especially for the second half.

However, Morgan Stanley expects an oil market surplus in 2025, albeit smaller than previously.

Source: Investing.com