Oil Prices Decline Amid OPEC+ Production Plans and Demand

Oil prices continued to fall, fueled by anticipation of increasing supply from OPEC+ beginning in October.
Oil prices continued to fall, fueled by anticipation of increasing supply from OPEC+ beginning in October.
Oil prices continued to fall, fueled by anticipation of increasing supply from OPEC+ beginning in October.

Oil prices continued their downward trend on Monday, driven by expectations of increased production from OPEC+ starting in October, alongside signs of sluggish demand in major markets like China and the United States.

By 08:15 GMT, Brent crude futures fell by 21 cents, or 0.3%, to $76.72 per barrel, while U.S. West Texas Intermediate (WTI) crude decreased by 14 cents, or 0.2%, to $73.41.

Both Brent and WTI experienced notable declines last week, losing 1.4% and 3.1%, respectively, on Friday. With these trends, analysts warn of the risk that prices could revisit multi-month lows, according to Chris Weston, head of research at brokerage Pepperstone.

OPEC+ Production Increases:

The Organization of the Petroleum Exporting Countries (OPEC) and its allies, collectively known as OPEC+, are set to implement planned increases in oil output beginning in October. Six sources from the producer group informed Reuters that eight OPEC+ members are scheduled to boost production by 180,000 barrels per day (bpd) as part of a strategy to gradually unwind a previous supply cut of 2.2 million bpd while maintaining some cuts until the end of 2025.

Concerns arise that a significant ramp-up in production could further exacerbate the supply-demand imbalance, exerting additional downward pressure on prices. Achilleas Georgolopoulos, an investment analyst at brokerage XM, noted that these production increases could occur during a period of slowing global economic growth, particularly as disappointing data from China continues to emerge.

Recent Demand Concerns:

Both Brent and WTI have recorded losses for two consecutive months, primarily due to concerns regarding demand from the U.S. and China, which have outweighed the impact of recent interruptions in Libyan oil supply and geopolitical risks in the Middle East. Although Libyan exports are still suspended, the Arabian Gulf Oil Company has resumed output at approximately 120,000 bpd to satisfy domestic requirements following a standoff that had shut down most of the country’s oilfields.

Manufacturing Activity in China:

Recent data has raised further doubts about Chinese demand growth. An official survey revealed that manufacturing activity fell to a six-month low in August, with factory gate prices decreasing and factory owners struggling to secure orders. Tony Sycamore, an IG market analyst, emphasized that the weaker-than-expected China PMI report raises concerns about the Chinese economy potentially missing growth targets.

The situation is mirrored in the United States, where oil consumption dropped to seasonal lows in June, marking levels not seen since the COVID-19 pandemic 2020, as indicated by data from the Energy Information Administration released on Friday.

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Tony Boyce is a seasoned journalist and editor at Sharks Magazine, where his expertise in business and startups journalism shines through his compelling storytelling and in-depth analysis. With 12 years of experience navigating the intricate world of entrepreneurship and business news, Tony has become a trusted voice for readers seeking insights into the latest trends, strategies, and success stories.

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