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Oil prices drop for the first time in three weeks as a glut of supply looms

The oil prices continued to fall into the third session of Friday. They are now headed for a loss on a weekly basis for the first time since three weeks, as supply expectations increase and a surprising buildup in U.S. crude stock adds to concerns about demand.

Brent crude futures dropped 10 cents or 0.15% to $66.89 per barrel at 0420 GMT. U.S. West Texas Intermediate Crude fell 13 cents or 0.20% to $63.35.

Brent is down 1.78%, and WTI is down 1% this week.

ANZ Research analysts said in a Friday note that the price of crude oil remained low amid rising OPEC+ supplies.

Analysts said that market expectations are increasing, with the expectation of the group pushing more barrels onto the market in order to regain the market share previously lost by U.S. producers.

Two sources familiar with the discussion were quoted as saying that two members of the Organization of the Petroleum Exporting Countries (OPEC+) and their allies, such as Russia, will be considering raising production in October during a Sunday meeting.

Another boost could mean that OPEC+ - which pumps around half the world's crude oil - would start unwinding a second layer, or 1,6 million barrels of oil per day. This would be more than a full year ahead of schedule.

The Energy Information Administration reported on Thursday that U.S. crude inventories increased by 2.4 million barrels as refineries entered maintenance season. This was in contrast to expectations from a poll which predicted a draw of 2 million barrels.

BMI analysts stated in a recent report that the strength in the downstream sector was a major support to prices. However, refining margins are likely to be squeezed over the next few months as global growth slows and refiners increase maintenance.

The BMI analysts stated that this will reduce throughput and therefore the demand for crude.

The market is still plagued by supply risks.

A White House official confirmed that U.S. president Donald Trump had told European leaders Thursday to stop buying Russian crude oil.

If Russia cuts its crude exports, or if there is any disruption in supply, it could drive up the price of oil globally. Reporting by Siyi LIu in Singapore and Arathy SOMASEKHAR and Georgina Mcartney in Houston. Editing by Tom Hogue and Sonali Paul.

(source: Reuters)