Oil prices drop for the first time since April due to OPEC+ production increase prospects

The oil price dropped for a 4th consecutive session on the Friday, and was set to experience their first weekly drop in three weeks. This was due to renewed pressure from supply, resulting from a possible OPEC+ production increase in July.

Brent futures dropped 31 cents or 0.5% to $64.13 per barrel at 0412 GMT. U.S. West Texas Intermediate Crude Futures fell 33 cents or 0.5% to $60.87.

Brent and WTI have both fallen 2.5% this week after two weeks of gains.

The two contracts reached their lowest levels in over a week on Thursday, after Bloomberg News reported that OPEC+ would be considering a large production increase during a June 1 meeting.

The report cited delegates as saying that delegates discussed the possibility of increasing production by 411,000 barrels per day (bpd). However, no agreement was reached.

In a recent research note, ING analysts stated that "the oil market is facing renewed pressure due to the noise surrounding what OPEC+ plans to do with its July output level."

Brent is currently expected to average $59 a barrel by the end of the fourth quarter.

OPEC+ (which includes the Organization of the Petroleum Exporting Countries, as well as allies like Russia) agreed to increase production in April, may and June by almost 1 million barrels daily (bpd).

The positive supply outlook offset earlier this week's jitters triggered by reports that Israel was preparing to strike Iranian nuclear installations and by new sanctions announced by Britain and the EU on Russia's oil market.

The U.S. crude oil stockpile also contributed to the rise in oil prices.

The Tank Tiger, a storage broker, says that as traders prepare for a surge in supply from OPEC+ in the coming months, U.S. crude storage demand has risen in recent weeks, reaching levels comparable to those of the COVID-19 epidemic.

Baker Hughes will release data on Friday that includes the U.S. oil rig count, which is used to predict future supply.

The market also closely watches the U.S. - Iranian nuclear negotiations, which could determine future supplies of Iranian oil. Friday, the fifth round of negotiations will be held in Rome.

(source: Reuters)