LONDON: Oil extended its decline into a third session on Friday, heading for a weekly loss for the first time in three weeks as expectations grow of higher supply and a surprise increase in U.S. crude inventories added to demand concerns.
Reuters reported on Wednesday that the eight members of OPEC+ will consider raising production further at a meeting on Sunday. US crude inventories rose 2.4 million barrels last week, rather than falling as analysts expected.
Brent crude futures fell $1.33, or 1.99%, to $65.66 a barrel by 1323 GMT, while US West Texas Intermediate crude dropped $1.36, or 2.14%, to $62.12.
“There are increasing stories and signs of a future where feedstock supply is unlikely to be a problem,” said John Evans at oil broker PVM.
For the week, Brent is down 3.6% and WTI down 2.95%.
Expectations are growing that the Organisation of the Petroleum Exporting Countries and allies like Russia – known together as OPEC+ – will push more barrels into the market to regain market share at Sunday’s meeting.
Another boost would mean that OPEC+, which pumps about half of the world’s oil, would be starting to unwind a second layer of output cuts of about 1.65 million barrels per day, or 1.6% of world demand, more than a year ahead of schedule.
“If the eight OPEC+ countries were to agree on another production increase, we believe this would place significant downward pressure on oil prices. After all, there is already a significant risk of a supply surplus,” Commerzbank analysts said in a note.
Supply risks continue to support the market, however. U.S. President Donald Trump told European leaders on Thursday that Europe must stop buying Russian oil, a White House official said.
Any cuts to Russia’s crude exports or other disruption to supplies could push global oil prices higher.
“There remains the risk that Western powers could ramp up sanctions against Russia in an attempt to compel President Putin to the negotiating table,” JP Morgan analysts said on Friday.
