Crude oil prices declined on Monday, continuing the downward trend from the end of last week, amid expectations of increased production by OPEC+ starting in October. Concerns over sluggish demand in China and the United States have further dampened the outlook for future consumption growth.
By 10:20 GMT, Brent crude futures had fallen by 8 cents, or 0.1 per cent, to $76.85 per barrel, while U.S. West Texas Intermediate (WTI) crude was down 11 cents, or 0.2 per cent, at $73.44 per barrel. On Friday, Brent and WTI had already lost 1.4 per cent and 3.1 per cent, respectively.
Chris Weston, head of research at brokerage firm Pepperstone, warned that with momentum trending downwards, there is a significant risk that oil prices could revisit ranges not seen in several months.
The Organisation of the Petroleum Exporting Countries (OPEC) and its allies, collectively known as OPEC+, are expected to proceed with planned increases in oil production from October, according to six sources within the producer group who spoke to Reuters.
As part of a strategy to start easing their recent supply cuts of 2.2 million barrels per day (bpd), eight OPEC+ members are scheduled to increase output by 180,000 bpd in October, while maintaining other production cuts until the end of 2025.
“There are concerns about an even larger increase in production, which could further disrupt the supply-demand balance and put additional downward pressure on prices,” said Achilleas Georgolopoulos, investment analyst at brokerage XM.
“These more significant production hikes could coincide with a global economic slowdown, with China continuing to underperform,” he added.
Both Brent and WTI have recorded losses for two consecutive months, as worries about demand in the U.S. and China have outweighed recent supply disruptions in Libya and potential supply risks stemming from conflict in the Middle East.
“The weaker-than-expected Chinese PMI data released over the weekend has heightened concerns that China’s economy may fail to meet growth targets,” said Tony Sycamore, market analyst at IG.
In the United States, oil consumption in June fell to seasonal lows not seen since the COVID-19 pandemic in 2020, according to data released by the Energy Information Administration last Friday.
Meanwhile, OPEC says Nigeria’s average daily crude oil production increased to 1.27 million barrels per day (bpd) in June.
