Due to supply restrictions, oil prices rise as attention goes to the OPEC+ conference

Oil prices rose by about $1 in early trade on Friday, supported by supply concerns and a weaker U.S. dollar as attention focuses on what OPEC and allies, including Russia, decide at a meeting next week that would mark the conclusion of their 2020 production reduction agreement.

Futures for September delivery of U.S. West Texas Intermediate (WTI) crude rose by $1.09, or 1.1 percent, to $97.51 a barrel as of 00:41 GMT, reversing losses from the previous session, which was plagued by concerns of a U.S. recession.

The September Brent oil futures price jumped by 86 cents, or 0.8%, to $108.00 per barrel. The more often traded October contract increased 87 cents, or 0.9%, to $102.70.

Brent is anticipated to improve by more than 5 percent for the week, its second consecutive weekly gain, while WTI is anticipated to increase by around 3 percent, recouping its losses from the previous week.

Tina Teng, an analyst at CMC Markets, said, "There is a minimal likelihood that oil prices will sustain large losses owing to the weak U.S. currency and the ongoing supply pressure."

Generally, oil prices rise when the dollar falls because a weaker dollar makes crude oil more inexpensive for buyers holding foreign currencies.

The next meeting of the Organization of the Petroleum Exporting Countries (OPEC) and allies led by Russia, known collectively as OPEC+, will be crucial on August 3, as the producers have reversed the record 9.7 million barrels per day (bpd) supply cut they agreed to in April 2020, when the COVID-19 pandemic lowered demand.

Two OPEC+ sources told Reuters that the organization will discuss a modest increase in oil output for September. Two OPEC+ sources also stated that the organization may consider keeping September's oil production the same.

After U.S. Vice President Joe Biden's trip to Saudi Arabia this month to negotiate an oil production deal, a decision not to boost oil production would be upsetting for the United States.

The U.S. government is happy about the next OPEC+ meeting, according to a senior U.S. administration official who said on Thursday that an increase in production would help stabilize the market.

Analysts, however, said that it would be difficult for OPEC+ to considerably raise production, given that several nations are failing to meet their output quotas due to underinvestment in oil resources.

"OPEC production is limited, although Libyan and Ecuadoran supplies are stabilizing. Several member states' insufficient investment would restrict production "ANZ Research analysts noted.