Crude Oil Falls as OPEC+ Output Increase Gains Momentum

Brent futures slumped by 47 cents or 0.72 per cent to $64.44 a barrel and the US West Texas Intermediate (WTI) futures crumbled by 37 cents or 0.6 per cent to $61.20 per barrel.

OPEC+ is discussing whether to make another large output increase at their meeting on June 1st, stoking concerns that global supply could outpace demand growth.

An increase of 411,000 barrels per day for July is among the options under discussion, though no final agreement has been reached.

Market analysts noted that this impending OPEC+ decision is going to be pretty weighty, coming at a time that Kazakhstan’s oil production has risen by 2 per cent in May.

The group earlier planned to accelerate output increases and could bring back as much as 2.2 million barrels per day by November 2024.

OPEC+ has been in the process of unwinding production cuts, with additions to the market in May and June.

Prices were already lower in the session after Energy Information Administration (EIA) data released on Wednesday showed that crude and fuel inventories in the world’s largest oil producer showed surprise stock builds last week as crude imports hit a six-week high and gasoline and distillate demand slipped.

Crude inventories rose by 1.3 million barrels to 443.2 million barrels in the week ended May 16, the EIA said.

Demand for crude oil storage capacity in the US had ballooned in recent weeks as traders anticipate an increase in OPEC+ supply.

Curbing losses on Thursday, US oil company Chevron’s license to operate in Venezuela will expire on May 27, US Secretary of State Marco Rubio said in a post on his X account.

The US Dollar rally came on the back of Congress passing the US federal budget, which features significant spending cuts. Stronger greenback makes oil expensive for holders of other currencies.