Oil Holds Decline as OPEC+ Set for Bumper Production Quota Hike
Oil was little changed before an OPEC+ meeting that’s set to deliver another oversized production hike, threatening to swell a glut forecast for later this year.
Brent traded near $69 a barrel after losing 0.4% on Thursday, while West Texas Intermediate traded above $67. The cartel has begun discussing a fourth 411,000 barrel-a-day production increase for August ahead of the group’s video-conference on Sunday, delegates said. That is triple the initially scheduled rate to revive the halted output.
There were also talks to shift the virtual session of the Organization of the Petroleum Exporting Countries and its allies to Saturday due to scheduling issues, several delegates said. The group will keep adding output until its market share returns to the 28-30% range, leaving markets facing a surplus of as much as 600,000 barrels a day this quarter, according to Bloomberg Intelligence analyst Henik Fung.
“Softening demand signals and rising supply are building a bearish narrative,” said Charu Chanana, chief investment strategist at Saxo Markets Ltd. in Singapore. “While any surprise from OPEC+ could jolt prices temporarily, the broader backdrop — challenged macro conditions and trade-related demand uncertainty — may cap upside in the near term.”
Crude has been volatile in recent weeks, roiled by fears that the Israel-Iran war would hamper supply. While markets have since calmed, concerns linger on negotiations with Iran and trade talks over tariffs that could crimp oil demand.
The US plans to restart nuclear talks with Iran, and US Middle East envoy Steven Witkoff is set to meet Iran’s Foreign Minister Abbas Araghchi in Oslo next week, Axios reported. Meanwhile, the US took fresh steps to restrict the trade of the Islamic Republic’s oil, keeping up pressure on Tehran — with the Treasury and State departments on Thursday announcing separate sanctions on companies and a “shadow fleet” of vessels.
In Canada, a wildfire emerged in the Fort McMurray area, about 20 kilometers (12 miles) from a major oil sands production site, offering a fresh reminder of the seasonal threat to the country’s supplies. Production from Alberta fell to the lowest in two years in May, combining with falling output from Mexico and a ban on Venezuelan flows to strengthen heavy crude prices.
Brent for September delivery slipped 0.3% to $68.59 a barrel at 10:01 a.m. in Singapore.
WTI for August delivery fell 0.2% to $66.88 a barrel.
Source : Bloomberg
