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MW Oil futures slip Friday, amid report of coming OPEC+ output hike

By Mark DeCambre

Oil futures on Friday were headed lower, pressured by a report that OPEC and its allies will discuss a further increase to global output than had been previously expected among its members at a meeting next week.

On Thursday, Reuters reported that the Organization of the Petroleum Exporting Countries and its allies, including Russia, known as OPEC+, is weighing additional production increases, "beyond its existing deal to boost production by 400,000 barrels per day," as prices for crude trade near year three-year highs.

The group, which convenes on Monday, had been widely expected to keep current plans to raise overall production by 400,000 barrels a day each month in place.

November West Texas Intermediate crude was trading 38 cents, or 0.5%, lower at $74.65 a barrel on the New York Mercantile Exchange. The December Brent contract, the global benchmark, was off 13 cents, or 0.2%, at $78.19 a barrel on ICE Futures Europe exchange.

For September, WTI gained 9.5%, while Brent saw a rise of 7.6%, based on the front-month contracts, according to Dow Jones Market Data. For the quarter, WTI climbed of 2.1%, up a sixth consecutive quarter, while Brent marked a 4.5% advance.

Reports centering on OPEC+'s plans and a surprise jump in U.S. inventories have combined to weigh on crude prices for the week, analysts said.

"Oil prices are poised to close the week in a bearish track as traders were surprised by a build of crude stocks in the US and are pricing in reports that OPEC+ may consider an option to hike output more than planned in its coming meeting," wrote Louise Dickson, senior oil markets analyst at Rystad Energy, in a Friday note.

Energy Information Administration data Wednesday revealed a weekly rise of 4.6 million barrels in U.S. crude inventories after seven consecutive weeks of declines on the back of storm disruptions in the Gulf of Mexico.

"Building inventories triggered an alarm for markets, especially at a time when Brent exceeded $80 per barrel, and traders question how justified this new threshold is," wrote Dickson. "If OPEC+ sticks to the plan, then we shouldn't see much downside, but reports indicate that talks are open to other scenarios too," the analyst wrote.

On Thursday, a report that China told state-owned energy companies to build their reserves to meet power needs for the winter also was weighing on energy values.

See: Why OPEC+ is likely to keep its plan to boost oil output

-Mark DeCambre

$(END)$ Dow Jones Newswires

October 01, 2021 08:08 ET (12:08 GMT)

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