Crude oil prices fell at the start of the week due to an anticipated increase in OPEC+ supply and the disappearance of the wartime premium after the Israel-Iran ceasefire.
The global economic outlook remains cautious, with bearish sentiment also influenced by recent manufacturing data from China.
US active drilling rig counts for both oil and gas continued to decline, with oil rigs specifically down by 47 compared to a year ago.
Crude oil prices began trading with a loss this week as traders anticipated another OPEC+ supply boost next month at a rate of 411,000 barrels per day, taking the cumulative increase this year to 1.78 million barrels daily, according to preliminary reports.
At the time of writing, Brent crude was trading at $67.63 per barrel, with West Texas Intermediate at $65.23 per barrel, following Reuters reporting over the weekend that OPEC+ was going to extend its production additions in August. The disappearance of the wartime premium following the Israel-Iran ceasefire added to downward pressure on oil prices.
“We do think the group is most likely to still go ahead with the August accelerated unwinding,” Energy Aspects analyst Richard Bronze said, as quoted by Reuters. OPEC+ is meeting this Sunday to discuss net month’s production plans. Reuters quoted unnamed sources as saying the group may even boost the size of output additions for August.
The outlook for the global economy remains wary, Phillip Nova analyst Priyanka Sachdeva told Reuters earlier today. Factory data from China also contributed to the bearish sentiment. According to the latest PMI figures from Beijing’s statistics bureau, manufacturing activity in China rose slightly to 49.7 this month from 49.5 in May but remained below the 50 threshold that marks the difference between growth and contraction. This was the third consecutive month with sub-50 PMI readings.
On the other hand, “Two months of successive improvement, that’s a decent reading given June was the first full month without Trump’s prohibitive 100%-plus tariffs,” said Economist Intelligence Unit analyst Xu Tianchen.
Meanwhile, the active drilling rig count in the United States fell for another week, by six for oil and by two for gas. The total number of active rigs across the U.S. oil patch is now 34 rigs lower than it was a year ago. The decline for oil rigs specifically is 47.
By Irina Slav for Oilprice.com
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