Oil prices fall on the prospect of more OPEC+ supplies, easing Mideast risks
Oil prices dropped on Monday, as a easing of geopolitical risk in the Middle East coupled with the prospect of an OPEC+ production increase in August boosted supply expectations in spite of persistent uncertainty about the outlook for the global demand.
Brent crude futures dropped 13 cents or 0.19% to $67.64 per barrel at 0344 GMT ahead of the expiration of the contract for August later on Monday. The September contract, which is the more active one, was down 18 cents at $66.62.
U.S. West Texas Intermediate Crude fell 32 cents or 0.49% to $65.2 per barrel.
Both benchmarks experienced their largest weekly drop since March 2023 last week. However, they are expected to end higher in June, with a second monthly gain of over 5%.
Brent prices soared after U.S. airstrikes on Iran's nucleus facilities, and then fell to $67 a barrel when President Donald Trump announced a ceasefire between Israel and Iran.
Tony Sycamore, IG's markets analyst, said that the market has removed most of the premium for geopolitical risks built into the price after the Iran-Israel ceasefire.
Four delegates of OPEC+ (which includes allies of the Organization of the Petroleum Exporting Countries) said that the group is set to increase production by 411,000 barils per day in August following similar increases for May June and July.
OPEC+ will meet on the 6th of July and this would mark the fifth consecutive monthly increase since April, when the group began unwinding its production cuts.
The bearish pressure that comes from the concerns about a slower global demand for oil, especially from China, will likely persist.
Priyanka Sackdeva, Senior Market Analyst at Phillip Nova, says that the uncertainty surrounding global growth is continuing to limit prices.
China's factory output contracted for the third consecutive month in June as weak demand at home and a decline in exports put pressure on manufacturers due to uncertainty over U.S.-China trade.
Baker Hughes reported that the number of oil rigs operating in the U.S. fell six to 432, its lowest level since October 20, 2021. (Reporting and editing by Florence Tan, Sam Li and Himani Sarkar;
(source: Reuters)
