Oil prices continue to decline amid rumors that OPEC+ will consider another production increase
Investors and traders say OPEC+ will consider further increases in oil production. Ahead of a weekend OPEC+ meeting where producers are expected to consider another increase in their production targets, oil prices fell on Thursday, extending a more than 2% decline from the previous session. The OPEC+ meeting is scheduled for Sunday.
Brent crude fell 46 cents, or 0.7%, to $67.14 a barrel by 04:16 GMT, while WTI crude fell 47 cents, or 0.7%, to $63.5 a barrel.
The eight members of the Organization of the Petroleum Exporting Countries (OPEC+) and their allies aim to regain market share, and sources familiar with the talks said they will consider further production increases in October at a meeting on Sunday.
Brent crude has come under renewed pressure as OPEC+ considers producing more oil in the fourth quarter. If this happens, managing the expected surplus, especially during a period of weak demand, will be more difficult.
OPEC+ had agreed to raise its production targets by approximately 2.2 million bpd from April to September, in addition to a 300,000 bpd quota increase for the United Arab Emirates.
Despite accelerating production increases, Middle Eastern oil prices have remained among the strongest regional prices globally in the past few months. This has boosted the confidence of Saudi Arabia and other OPEC members to increase production.
Another factor driving OPEC+'s decision to increase quotas since April is to gain more market share. This suggests that OPEC+ is more comfortable with a lower Brent crude price of around $60-65 per barrel compared to its previous target of $70 per barrel. This would push WTI into the $50-60 range, challenging the economics of US shale oil supply growth.
Market sources said that US crude oil inventories increased by 622,000 barrels in the week ending August 29, citing data from the American Petroleum Institute (API) released on Wednesday.
The API's forecast for an increase in US crude oil inventories contradicted analysts' estimates. Analysts had predicted that US crude oil inventories would decrease by an average of 2 million barrels.
Market participants are now awaiting government data on US crude oil inventories, which will be released on Thursday, a day later than usual due to Monday's US holiday.
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