Oil heads for first weekly loss in three as supply glut looms

SINGAPORE: Oil prices extended their decline into a third session on Friday, heading for a weekly loss for the first time in three weeks as supply expectations grow and a surprise build in U.S. crude stocks adds to demand concerns.

Brent crude futures fell 19 cents, or 0.28%, to $66.80 a barrel by 0642 GMT, while U.S. West Texas Intermediate crude fell 23 cents, or 0.36%, to $63.25.

Brent was down 1.92% and WTI down 1.19% so far this week.

Crude oil remained under pressure amid concerns of rising OPEC+ supply, ANZ research analysts wrote in a note on Friday.

Market expectations are growing that the group will push more barrels into the market to regain market share lost to U.S. shale producers in recent years, the analysts said.

Reuters reported on Wednesday that eight members of the Organization of the Petroleum Exporting Countries and allies like Russia – known together as OPEC+ – will consider raising production further in October at a meeting on Sunday, citing two sources familiar with the discussions.

Another boost would mean that OPEC+, which pumps about half of the world’s oil, would be starting to unwind a second layer of output cuts of about 1.65 million barrels per day, or 1.6% of world demand, more than a year ahead of schedule.

Meanwhile, U.S. crude oil inventories rose 2.4 million barrels last week as refineries headed into maintenance season, data from the Energy Information Administration showed on Thursday, compared with expectations in a Reuters poll for a 2 million-barrel draw.

Strength in the downstream sector has been a key support for prices over recent months, BMI analysts said in a report, but refining margins will likely be squeezed in coming months as global demand growth wanes and refiners ramp up maintenance.

This, in turn, will lower throughput, reducing the call on crude, the BMI analysts said.
Supply risks, though, continue to cloud the market.

U.S. President Donald Trump told European leaders on Thursday that Europe must stop buying Russian oil, a White House official said.

Any cuts to Russia’s crude exports or other disruption to supplies could push global oil prices higher.