Oil continues to fall on the back of weak China data and the prospect of increased OPEC+ supplies
The oil prices continued to fall on Monday, as OPEC+ is expected to increase production in October. Meanwhile, signs of sluggish consumption in China and America, the two biggest oil consumers in the world, have raised concerns over future growth.
Brent crude futures dropped 61 cents or 0.8% to $76.32 a bar by 0450 GMT, while U.S. West Texas intermediate crude fell 52 cents or 0.7% to $73.03 a bar.
Last week, Brent fell by 0.3% and WTI dropped 1.7%.
Six sources within the oil producer group have confirmed that the Organization of the Petroleum Exporting Countries and its allies (OPEC+) are planning to increase their oil production starting in October.
Eight OPEC+ member countries are expected to increase their output by 180,000 barrels a day (bpd), as part of a strategy to unwind the most recent layer, which was 2.2 million bpd. Other cuts will remain in place until 2025.
Tony Sycamore, IG's market analyst, said: "There is concern that OPEC may increase production from October."
"However I believe that outcome is dependent on price, in that it occurs if the WTI is closer to $80 rather than $70."
Brent and WTI both posted losses in two consecutive months, as U.S. demand and Chinese concerns outweighed the recent disruptions to Libyan oil supplies amid a dispute among government factions and tensions in key Middle East regions related to the Israel/Gaza conflict.
Engineers said that while Libyan exports are still halted the Arabian Gulf Oil Company is now producing up to 120,000 barrels per day to meet the domestic demand. This was after the standoff among the factions closed most of the oilfields in the country.
A survey conducted by the Chinese government on Saturday showed that demand for goods in China was at a six-month-low in August. Factory gate prices were down and owners had difficulty securing orders. However, a survey of private companies on Monday showed signs of a tentative improvement in August.
Sycamore stated that "the softer than expected China PMI released at the weekend raises concerns about the Chinese economy missing growth targets."
Data from the Energy Information Administration on Friday showed that oil consumption in the U.S. slowed down to its lowest seasonal level since the 2020 coronavirus pandemic.
ANZ analysts wrote in a report that they expect growth to be lower in 2025 due to economic headwinds from China and the U.S.
If OPEC wants higher prices, it will be forced to delay the end of the voluntary production cut.
Baker Hughes' weekly report stated that the number of U.S. oil drilling rigs remained unchanged last week at 483.
(source: Reuters)
