Oil prices continue to fall on the prospect of increased OPEC+ supplies

The oil prices continued to fall on Monday as investors weighed higher OPEC+ output in October against a sharp decline in Libyan production amid sluggish demands in China and the U.S.

Brent crude futures dropped 57 cents or 0.7% to $76.36 per barrel at 0108 GMT, while U.S. West Texas Intermediate Crude fell 50 cents or 0.7% to $73.05 per barrel.

Last week, Brent fell by 0.3% and WTI dropped 1.7%.

Six sources within the producer group have confirmed that the Organization of the Petroleum Exporting Countries (OPEC+) is planning to increase oil production starting in October.

Eight OPEC+ member countries are expected to increase their output by 180,000 barrels a day in October as part of a strategy to unwind the most recent layer (2.2 million bpd) of cuts while maintaining other cuts until end-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."

Engineers said that the Arabian Gulf Oil Company in Libya has resumed production at up to 120,00 bpd for domestic use, but exports remain halted. This comes after a standoff among factions closed most of Libya's oilfields.

Brent and WTI both posted losses in two consecutive months, as concerns about economic growth in China and America outweighed disruptions to Libyan oil supply and increasing geopolitical tensions across the Middle East.

An official survey released on Saturday showed that China's manufacturing activity fell to its lowest level in six months as factory gate prices plummeted and owners struggled to get orders. This prompted policymakers to continue with their plans to provide more stimulus for households.

Sycamore stated that "the softer than expected China PMI released at the weekend raises concerns about the Chinese economy missing growth targets."

The U.S. Energy Information Administration reported on Friday that oil consumption in the U.S. slowed 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 voluntary production reductions.

Baker Hughes' weekly report stated that the number of U.S. oil drilling rigs remained unchanged last week at 483.

(source: Reuters)