Economy
Oil Market Declines on Rising Crude Stockpile, Expected OPEC+ Output Rise
By Adedapo Adesanya
The oil market eased by about 1 per cent on Thursday on a surprise build in US crude inventories last week and expectations that the Organisation of the Petroleum Exporting Countries and allies (OPEC+) will increase output targets at a meeting this weekend.
Brent crude futures fell by 65 cents or 1.0 per cent to settle at $66.95 a barrel and the US West Texas Intermediate crude futures declined by 49 cents or 0.8 per cent to close at $63.48 per barrel.
Crude oil inventories in the US increased by 2.4 million barrels during the week ending August 29, after falling 2.4 million barrels in the week prior, according to new data from the US Energy Information Administration (EIA) released on Wednesday. The build brings commercial stockpiles to 420.7 million barrels according to government data, which is 4 per cent below the five-year average for this time of year.
The EIA’s data release follows API’s figures that were released a day earlier, which suggested that crude oil inventories expanded by a more modest 622,000 barrels.
The EIA and API reported inventory data a day later than usual due to the US Labor Day holiday on Monday.
Eight members under the OPEC+ banner will consider further increases to production in October at a meeting on Sunday, September 7, with market analysts expecting that the hike would send a strong signal that regaining market share takes priority over price support.
OPEC+ has already agreed to raise output targets by about 2.2 million barrels per day from April to September, in addition to a 300,000-barrels per day quota increase for the United Arab Emirates (UAE).
US macroeconomic data showed new applications for jobless benefits increased more than expected last week, supporting expectations the US Federal Reserve would cut interest rates this month.
Investors have viewed the US central bank’s September meeting as a lock for a quarter percentage point cut in what is now a 4.25% to 4.5 per cent federal funds interest rate target range.
Typically, central banks use interest rates to control inflation. Lower rates reduce consumer borrowing costs and can boost economic growth and demand for oil.
US President Donald Trump told European leaders on Thursday that Europe must stop purchasing Russian oil that he said is helping Moscow fund its war against Ukraine.
Any reduction in the amount of crude Russia may export could boost prices. Russia was the second biggest producer of crude in 2024 after the US. Russia has other buyers including China and India.
