Oil prices drop on OPEC+ supply hike

Oil prices retreated on Friday as investors weighed expectations of a rise in OPEC+ supply starting in October, alongside dwindling hopes of a hefty US interest rate cut next month, following data showing strong consumer spending.

Brent crude futures for October delivery, which expire on Friday, settled $1.14 lower, or 1.43%, at $78.80 a barrel, marking a decline of 0.3% for the week and 2.4% for the month. US WTI crude futures settled down $2.36, or 3.11%, to $73.55, a drop of 1.7% in the week and a 3.6% decline in August.

OPEC+ is set to proceed with a planned oil output hike from October, as the Libyan outages and pledged cuts by some members to compensate for overproduction counter the impact of sluggish demand, six sources from the producer group told Reuters.

Meanwhile, investors responded to new data that showed US consumer spending increased solidly in July, suggesting the economy remained on firmer ground early in the third quarter and arguing against a half-percentage-point interest rate cut from the Federal Reserve next month.

Lower rates can boost economic growth and demand for oil.