SINGAPORE, September 2, 2024 (FFN) – Oil prices extended their losses on Monday, pressured by expectations of higher OPEC+ production starting in October and concerns over sluggish demand from the world’s two largest oil consumers, China and the United States.
Brent crude futures dropped by 56 cents, or 0.7%, to $76.37 per barrel by 0646 GMT, while U.S. West Texas Intermediate (WTI) crude fell 45 cents, or 0.6%, to $73.10 per barrel. This follows a 0.3% decline for Brent and a 1.7% drop for WTI last week.
The Organization of the Petroleum Exporting Countries (OPEC) and their allies, known collectively as OPEC+, are set to proceed with a planned oil output increase in October. According to six sources from the producer group, eight OPEC+ members are scheduled to boost output by 180,000 barrels per day (bpd) as part of a strategy to unwind recent production cuts while maintaining other reductions until the end of 2025.
“There are concerns that OPEC will go ahead and increase output from October,” said Tony Sycamore, an IG market analyst. “However, I think that outcome is price dependent in that it happens if the WTI price is closer to $80 than $70.”
Both Brent and WTI have faced losses for two consecutive months as concerns over U.S. and Chinese demand have outweighed disruptions in Libyan oil supply due to internal conflict and tensions in the Middle East.
In China, further pessimism emerged after an official survey revealed that manufacturing activity hit a six-month low in August, raising fears that the Chinese economy may fall short of its growth targets. Meanwhile, in the U.S., oil consumption in June slowed to the lowest seasonal levels since the 2020 coronavirus pandemic, according to data from the Energy Information Administration (EIA).
ANZ analysts expressed concern over future growth, stating, “We see downside in growth in 2025, driven by economic headwinds in China and the U.S. We believe OPEC will have no choice but to delay the phase-out of voluntary production cuts if it wants higher prices.”
The number of operating U.S. oil rigs remained unchanged at 483 last week, according to Baker Hughes.
| Oil Benchmark | Price | Change | Weekly Change | Monthly Change |
|---|---|---|---|---|
| Brent Crude Futures | $76.37 | -0.7% (-56 cents) | -0.3% | -2.4% |
| U.S. West Texas Intermediate (WTI) Crude | $73.10 | -0.6% (-45 cents) | -1.7% | -3.6% |
| OPEC+ Output Increase | 180,000 bpd | Planned for October | ||
| U.S. Oil Rigs Operating | 483 | No change |
Key Words: oil prices, OPEC+, China demand, U.S. oil consumption, WTI, Brent crude, manufacturing activity
