Crude oil prices were on course to book their steepest decline in four months following reports that OPEC+ was about to extend its production boost for another month at its Sunday meeting.
At the time of writing, Brent crude was trading at $64.53 per barrel, with West Texas Intermediate at $60.86 per barrel. Both were up slightly from Thursday’s close but had been trending lower since Monday, with Brent crude shedding 8.3% since the start of the week and WTI declining by 7.6%, according to Reuters.
The publication cited unnamed sources as saying that OPEC+ could decide to add another half a million barrels in daily production at the October 5 meeting. ING analysts also noted these reports as a downside risk for oil prices, although some analysts expressed doubts about the size of the new production hike.
Goldman Sachs, for instance, earlier this week forecast that OPEC+ would add 140,000 barrels daily to its collective production, although the bank suggested the hike could be larger based on market fundamentals. These include a smaller-than-expected OECD inventory increase and a decline in U.S. stockpiles that has brought them to the lowest in eight months.
“Demand from Asia remains solid, and we see downside risks to Russian oil production,” Goldman commodity analysts said. Vandana Hari from Vanda Insights also noted Chinese demand and stockpiling, as well as the seasonal uptick in oil demand as heating season begins.
Bloomberg, on the other hand, suggested there were already early signs of a glut, with unsold cargoes of Middle Eastern oil of between 6 and 12 million barrels in the latest spot market cycle that ended in September, with deliveries set for November and December. Citing trading sources, the publication said that usually these cargoes get gobbled up by bargain seekers from India and China, but that is not happening right now.
By Irina Slav for Oilprice.com
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