Latest News

Oil falls as OPEC+ increases August output more than anticipated

The oil price dropped more than 1% Monday, after OPEC+ surprised the markets by increasing output more than anticipated in August. This raised concerns about an oversupply.

Brent crude futures dropped 80 cents or 1.2% to $67.50 per barrel at 0010 GMT. U.S. West Texas Intermediate Crude was $65.68, which is down $1.32 or 2%.

The Organization of the Petroleum Exporting Countries (OPEC+) and its allies agreed to increase production in August by 548,000 barrels a day.

Tim Evans, of Evans Energy, said in a report that "the increased production clearly represents an aggressive competition for market shares and some tolerance for a resulting decrease in price and revenue."

The August increase is a big jump from the monthly increases that OPEC+ approved in May, June, and July. And 138,000 bpd for April.

OPEC+ cited a stable global economic outlook, healthy market fundamentals and low oil inventories as reasons to release more oil.

In a note, RBC Capital's analysts led by Helima Crockt stated that the decision would bring back nearly 80% (2.2 million bpd) of the voluntary cuts made by eight OPEC producers. The actual increase in production has been less than expected so far, and the majority of the supply comes from Saudi Arabia.

Saudi Arabia raised its August price of its flagship Arab Light crude on Sunday to a record high for Asia.

Goldman analysts anticipate OPEC+ will announce a final increase of 550,000 bpd for September during the next meeting, on August 3.

Separately Donald Trump, President of the United States, said that the United States was close to concluding several trade agreements and would notify other countries by July 9 about higher tariff rates. The higher rates are scheduled to go into effect on August 1, 2018. Florence Tan, Lisa Shumaker, and Christopher Cushing edited the report.

(source: Reuters)