Oil prices fell by 3% in American trading on Friday, extending losses and hitting one-week lows following reports that OPEC+ plans to increase output in October.
This marks the second consecutive monthly decline for oil prices, driven by growing concerns over global demand as China's economic struggles persist.
Prices
US crude dropped 3% today to $73.55 per barrel, marking a one-week low, after reaching a session high of $76.55.
Brent crude declined by 2.6%, settling at $76.74 per barrel, the lowest since August 23, with a session high of $79.49.
On Thursday, US crude gained 2.2%, while Brent rose 1.8%, marking their first increase in three days due to renewed optimism for improving US demand.
OPEC+
Six different OPEC+ sources informed Reuters that eight members of the global alliance are prepared to implement the planned production increase of 180,000 barrels per day (bpd) in October.
The sources confirmed that the production hike plans remain on track, with optimism that upcoming Federal Reserve rate cuts could stimulate economic growth.
However, Saudi Arabia’s energy minister, Abdelaziz Bin Salman, recently stated that OPEC+ might pause or even reverse the production hike if it's determined that the markets aren’t ready.
Libyan Output
Goldman Sachs anticipates that the current production outage in Libya will be temporary, projecting a decrease of 600,000 barrels per day (bpd) in September and 200,000 bpd in October.
Typically, Libya produces 1.2 million bpd, with most of its output exported to global markets, particularly Europe.
The country remains divided between two rival governments in Tripoli and Benghazi. The Benghazi government has halted production due to a dispute with the Tripoli government over Central Bank leadership.
Forces in eastern Libya, under the control of General Haftar, have the capability to shut down significant portions of production and infrastructure in the region.
US Stocks
The Energy Information Administration reported a decline of 0.8 million barrels in US crude inventories last week, bringing the total to 425.2 million barrels, which was below analysts' expectations of a 2.7 million barrel drop.
Gasoline inventories decreased by 2.2 million barrels to 218.4 million barrels, while distillate stocks fell by 0.3 million barrels to 123.1 million barrels.
US Output
The EIA also reported a decrease of 100,000 barrels per day (bpd) in US crude production last week, bringing the total to 13.3 million bpd, down from the record high of 13.4 million bpd.
Monthly Trades
Oil prices have dropped by an average of 6% this month, putting them on course for a second consecutive monthly loss.
Global Demand
OPEC cut its forecasts for global demand growth by 135,000 barrels per day (bpd) in the August report, citing weakness in Chinese demand.
The International Energy Agency (IEA) reported that global demand grew at the slowest pace since late 2022 in the second quarter, increasing by only 710,000 bpd.
The IEA noted that sluggish growth in China is limiting global gains, with Chinese oil demand declining for the third consecutive month in June.
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