Oil prices extended losses on Monday as expectations of higher OPEC+ output starting in October and signs of sluggish demand in China and the United States, the world’s two biggest oil consumers, raised concerns about future consumption growth.
Brent crude futures were down 56 cents, or 0.7%, at $76.37 a barrel by 0646 GMT, while WTI crude was down 45 cents, or 0.6%, at $73.10 a barrel.
The losses followed a 0.3% drop in Brent and a 1.7% drop in WTI last week.
There are concerns that OPEC will increase output from October, with the allies, known as OPEC+, set to continue with a planned oil output increase from October, market sources said.
The eight OPEC+ members are scheduled to increase production by 180,000 barrels per day (bpd) in October as part of a plan to begin rolling back the latest output cuts of 2.2 million bpd while keeping other cuts in place through the end of 2025.
However, that outcome is price-dependent, which would happen if WTI were closer to $80 rather than $70.
Both Brent and WTI posted losses for the second month in a row, weighed down by U.S. and Chinese demand concerns, tensions in the key Middle East-producing region over the Israel-Gaza conflict, and recent disruptions in Libyan oil supplies.
While Libya’s exports have stalled, it was said on Sunday that it was continuing production by up to 120,000 bpd to meet domestic needs after tensions between the factions shut down most of the country’s oil fields.
More pessimism emerged about demand growth in China after an official survey showed on Saturday that manufacturing activity fell to a six-month low in August as factory ex-factory prices fell and owners struggled to get orders but showed signs of a tentative recovery in August.
China’s manufacturing activity was the slowest in six months in August. A lower-than-expected China PMI released over the weekend is adding to concerns that the Chinese economy will miss its growth targets.
U.S. oil consumption fell to its lowest seasonal level since the 2020 coronavirus outbreak in June, data from the Energy Information Administration (EIA) showed on Friday.
Given all the headwinds, OPEC has little choice but to delay phasing out voluntary output cuts if it wants higher prices.
Baker Hughes said the number of operating oil rigs in the U.S. remained unchanged at 483 last week.
