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Oil falls on concerns about increased supply later in 2024

Signs of weakening U.S. demand spurt oversupply concerns later in the year


Oil prices fell as much as 1% in Asian trading on Tuesday, extending losses from a four-month low in the previous session as investors are concerned about increased supply later in the year amid signs of weakening U.S. demand.

Brent crude futures fell 73 cents, or 0.93%, to $77.63 a barrel by 0638 GMT. Brent fell more than 3% on Monday to settle below $80 for the first time since Feb. 7.

WTI futures, which fell 3.6% on Monday and settled at a four-month low, fell 87 cents, or 1.17%, to $73.35 a barrel.

OPEC+ agreed on Sunday to extend most oil output cuts through 2025, but left room for voluntary cuts from eight members to be gradually rolled back starting in October.

Oil prices have taken a double hit recently, with supply issues weighing whether OPEC+ will begin rolling back some output cuts from October 2024, while demand conditions were not helped by weaker-than-expected U.S. production.

U.S. production slowed for a second straight month in May, while construction spending fell unexpectedly for a second month in April amid declines in non-residential activity. Both of these factors reflect weaker demand for oil and fuel.

Further economic weakness could push oil prices lower, potentially paving the way for a retest of the lower end of its monthly range of $72.00.

Signs of weakening demand growth in recent months have weighed on oil prices, with data on U.S. fuel consumption in focus.

The average U.S. price of gasoline fell 5.8 cents per gallon to $3.50 per gallon on Monday, according to GasBuddy data.

The U.S. government will release official inventory and product supply data on Wednesday.

Product supply, considered a proxy for demand, will show how much gasoline is being consumed over Memorial Day weekend, the start of the U.S. driving season.

Some analysts say concerns about these macroeconomic drivers in the world’s largest oil consumer will continue to drive prices in the near term.

Indicators have suffered from data accuracy over May and which remain underwhelming. The market is increasingly concerned about U.S. consumers, U.S. end-user oil demand, and its global impact.