Oil fell to the lowest since May ahead of a weekend OPEC+ meeting where Saudi Arabia will seek to steer the group toward more production increases in the coming months.
West Texas Intermediate slid 2.5% to settle below $62 a barrel, down 3.3% this week. The alliance will hold a virtual meeting Sept. 7 to decide its next move after completing the restart of 2.5 million barrels a day of idled supply at its previous gathering.
Saudi Arabia wants to boost production further in a bid to offset lower prices with higher volumes, people familiar with the matter said. No decision has been made, and it’s not clear whether any increase would be agreed upon as soon as Sunday or only in later months.
“If the eight OPEC+ countries were to agree on another production increase, we believe this would place significant downward pressure on oil prices,” Commerzbank analysts Barbara Lambrecht and Carsten Fritsch wrote in a note. “After all, there is already a significant risk of a supply surplus.”
West Texas Intermediate crude futures have retreated about 14% this year after the shift by OPEC+ — coupled with supply increases from drillers outside the group — exacerbated concerns about a global glut. Market sentiment has also been weighed down by mounting worries over the health of the US economy, where job growth slowed last month.
Geopolitical tensions have also been in focus this week, with the US looking to pressure buyers of Russian crude to push Moscow into agreeing on a truce in Ukraine. As part of that effort, Washington has imposed a 50% levy on some imports from India. President Donald Trump said Friday that the US seems to have “lost India and Russia to deepest, darkest China.”
“Sentiment in crude markets is poor,” said Daniel Ghali, a commodity strategist at TD Securities. “Price action remains asymmetrically skewed to the downside into OPEC’s upcoming meeting, and with additional supply expected from Guyana and Brazil on the horizon, we remain tactically bearish on crude.”
Oil Prices
West Texas Intermediate for October delivery declined 2.5% to settle at $61.87 a barrel in New York.
Brent for November settlement fell 2.2% to settle at $65.50 a barrel.
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