U.S. crude futures fell on Friday as traders expected OPEC+ to decide on Saturday to increase oil output for July beyond previous estimates.

Brent crude futures settled down 25 cents, or 0.39%, at $63.90 a barrel. U.S. West Texas Intermediate crude settled down 15 cents, or 0.25%, at $60.79 a barrel, after earlier dropping more than $1 a barrel.

Brent July futures expire on Friday. The more liquid August contract fell 71 cents, or 1.12%, to $62.64 a barrel.

At that level, the benchmark front-month contract was headed for a weekly loss of more than 1%. Prices dipped into negative territory after Reuters reported that OPEC+ may discuss a larger July output increase than the 411,000 barrels per day (bpd) the group decided to increase for May and June.

"What OPEC+ is planning doesn't seem to be particularly supportive of the oil market," said Matt Smith, Kpler's chief analyst for the Americas.

The potential for OPEC+ production increases comes as the global surplus has widened to 2.2 million bpd, which would likely require price adjustments to encourage a supply-side response and restore balance, JPMorgan analysts said in a note, adding that they expect prices to remain in the current range before dropping into the $50s by year-end.

Phil Flynn, senior analyst at Price Futures Group, said an online post on Truth Social by U.S. President Donald Trump that appeared to threaten more changes in tariff rates on Chinese imports also weighed on crude prices. "Trump's Truth Social message about China's failure to abide by the tariff truce also combined with the Reuters headline to push prices lower," Flynn said.

Trump's tariffs are expected to remain in place after a federal appeals court temporarily reinstated them on Thursday, reversing a trade court decision the day before to immediately block the hefty duties.

U.S. energy firms this week cut the number of oil and natural gas rigs operating for a fifth straight week to the lowest level since November 2021, energy services firm Baker Hughes (BKR.O) said in its closely watched report on Friday.

It was the first time since September 2023 that the rig count has declined for five straight weeks.

Baker Hughes said this week's decline brought the total rig count down by 37 rigs, or 6%, from the same time last year. The oil rig count fell by four to 461 this week, the lowest since November 2021, the firm said. The gas rig count rose by one to 99. (alg)

Source: Reuters