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Oil prices rise to three-month high ahead of OPEC meeting

A version of this story first appeared in CNN Business' Before the Bell newsletter. Not a subscriber? You can sign up right here.

The latest: OPEC will meet on Saturday to discuss extending output cuts by one month, two OPEC sources confirmed to CNN Business.

Members of OPEC and their allies, including Russia and Mexico, already pledged to cut output by 9.7 million barrels a day in May and June, helping to prop up oil prices as demand for crude begins to recover.

But Bjornar Tonhaugen, head of oil markets at Rystad Energy, notes that oil producers are still managing a tough balancing act. They'll likely want to keep whittling down what's in storage facilities, helping prices rise to a more sustainable level, before reversing course.

"Even if demand exceeds supply for a while, that does not mean that we really have a problem," Tonhaugen told clients Friday.

Investors are now mostly focused on what will happen in August. Craig Erlam, senior market analyst at Oanda, thinks output will likely be able to increase again at that point.

"With people leaving their houses, returning to work — maybe even avoiding public transport in favor of [cars] — and borders reopening, record supply cuts won't have to last much longer to sustain these prices," he said.

The US unemployment rate could hit nearly 20%

The US unemployment rate likely skyrocketed to its highest level since World War II in May as the coronavirus pandemic devastated America's economy and pushed millions of people out of work.

What's happening: Economists polled by Refinitiv expect the US economy to shed another 8 million jobs in May, bringing the tally of jobs lost during the coronavirus pandemic to 28.5 million — more than three times the number of jobs lost during the 2008 financial crisis, my CNN Business colleague Anneken Tappe reports.

That would push the unemployment rate to nearly 20%, a record high. The US Bureau of Labor Statistics, which is set to release its jobs report Friday morning, began tracking monthly data in 1948.

The big question now is whether the labor market is starting to improve. Goldman Sachs economists said that more frequent jobless claims data suggests that the employment situation started to recover in the second half of last month.

The investment bank said it will pay special attention to the number of unemployed workers on furlough or temporary layoff in this jobs report, noting this may hold the key to avoiding a weak comeback.

"Over the last 50 years, the three recessions with the highest share of temporary layoffs were followed by the fastest labor market recoveries," chief economist Jan Hatzius' team observed.

Watch this space: Ellen Zentner, chief US economist at Morgan Stanley, notes that data on wages has been affected by the types of jobs lost during the pandemic.

Average hourly earnings rose 4.7% in April, but that's because unemployment fell mostly on lower-wage segments of the job market, Zentner said in a note to clients this week.

The bank expects layoffs in May to have been more evenly distributed across the pay scale, but economists polled by Refinitiv still think average hourly earnings will tick up 1% compared to the previous month.

US billionaires have become way richer during the pandemic

The past three months have been financially painful for many Americans — but not for billionaires, my CNN Business colleague Matt Egan reports.

US billionaires have become $565 billion richer since March 18, according to a report published this week by the Institute for Policy Studies, a progressive think tank.

Total wealth for billionaires now stands at $3.5 trillion, up 19% from the low point near the beginning of the pandemic, the report said. Amazon boss Jeff Bezos alone is worth $36.2 billion more than he was on March 18.

Why it matters: Since then, nearly 43 million Americans have filed for initial unemployment benefits. The numbers emphasize the deep divide between haves and have-nots helping to fuel unrest across the United States.

Wealth inequality is likely to get even worse because of this crisis, experts say. That's in part due to the surging stock market, which helps the rich.

See here: The top 10% of households owned 84% of all stocks in 2016, according to NYU professor Edward Wolff.

Up next

The US jobs report for May posts at 8:30 a.m. ET. That will include data on the unemployment rate and average hourly earnings.

Coming tomorrow: OPEC and allies meet virtually to discuss extending production cuts.

— John Defterios, Chris Liakos and Mary Ilyushina contributed reporting.

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