Sept 2 (Reuters) – Oil prices continued to decline on Monday, extending last week’s losses, as expectations of increased OPEC+ production in October and weak demand signals from China and the United States raised concerns about future consumption growth.
Thank you for reading this post, don't forget to subscribe!By 1221 GMT, Brent crude futures had dropped 20 cents, or 0.3%, to $76.73 a barrel, while U.S. West Texas Intermediate (WTI) crude was down 19 cents, or 0.3%, at $73.36. On Friday, Brent and WTI fell by 1.4% and 3.1%, respectively.
“The momentum is leaning towards the downside, raising the risk of oil prices hitting multi-month lows,” said Chris Weston, head of research at brokerage Pepperstone.
OPEC and its allies, known collectively as OPEC+, are expected to move forward with planned production increases starting in October, according to six sources within the group. The plan involves eight OPEC+ members boosting output by 180,000 barrels per day (bpd) in October, as part of the strategy to gradually reverse recent supply cuts of 2.2 million bpd. Other cuts will remain in place until the end of 2025.
“There are fears of a more substantial production hike, which could further disrupt the supply-demand balance and put additional downward pressure on prices,” warned Achilleas Georgolopoulos, an investment analyst at brokerage XM. “These increases might coincide with a slowing global economy, especially as China continues to underperform.”
Brent and WTI have both recorded losses over the past two months, as concerns about weak demand in the U.S. and China have outweighed supply disruptions in Libya and ongoing conflict-related risks in the Middle East.
Despite the halt in Libyan exports, the Arabian Gulf Oil Company resumed production at up to 120,000 bpd to meet domestic needs, following a resolution of the standoff that had shut down most of the country’s oilfields.
Concerns about Chinese demand deepened after an official survey on Saturday indicated that manufacturing activity fell to a six-month low in August, with factory gate prices dropping and orders dwindling.
“The weaker-than-expected China PMI data over the weekend intensifies worries that China might miss its growth targets,” said Tony Sycamore, a market analyst at IG.
In the U.S., oil consumption dropped to seasonal lows last seen during the COVID-19 pandemic in June 2020, according to data from the Energy Information Administration released on Friday.
