Oil prices head for first weekly loss since April on prospect of OPEC+ supply increase

Oil prices fell on Friday for the fourth session in a row and headed for their first weekly decline in three weeks, weighed down by renewed supply pressure from another possible OPEC+ production increase in July, UNN writes, citing Reuters.

DetailsBrent crude futures fell 48 cents, or 0.8%, to $63.96 a barrel at 06:35 GMT (09:35 Kyiv time). West Texas Intermediate U.S. crude futures lost 48 cents, or 0.8%, to $60.72.

Brent has fallen 2.3% for the week and WTI has fallen 2.9% after two weeks of gains.

Both benchmarks hit their lowest price in more than a week on Thursday after Bloomberg reported that OPEC+ is considering another significant production increase at its June 1 meeting. Among the options discussed was an increase in production of 411,000 barrels per day in July, but no final agreement has been reached yet, the report said, citing delegates.

“The oil market is under pressure again as the noise surrounding what OPEC+ will do with production levels in July increases,” ING analysts wrote in a research note.

They expect OPEC+ to continue to increase supplies by 411,000 barrels per day in July and now forecast an average Brent crude price of $59 a barrel in the fourth quarter.

OPEC+, which includes the Organization of the Petroleum Exporting Countries and allies such as Russia, has agreed to increase production by nearly 1 million barrels per day in April, May and June.

The tailwind of supplies offset concerns earlier this week caused by a report that Israel is preparing to strike Iranian nuclear facilities and new sanctions announced by the EU and Britain on oil trade with Russia.

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A large supply of oil in the United States also put pressure on oil prices.

As traders prepare for a flood of increased supplies in the coming months from OPEC+, demand for oil storage in the US has risen sharply in recent weeks to levels similar to those during the COVID-19 pandemic, according to storage broker The Tank Tiger.

On Friday, the market will monitor Baker Hughes’ data on the number of oil and gas rigs in the US, which are used as an indicator of future supplies.

The market is also closely monitoring US-Iran talks on the nuclear program, which could determine the future of Iranian oil supplies. The fifth round of talks will take place in Rome on Friday.

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