Oil prices slid on Thursday following reports that OPEC+ is considering boosting output in July, raising fears that supply could outpace demand growth worldwide. By late morning, Brent crude futures dropped 57 cents, or 0.88%, settling at $64.34 per barrel, while U.S. West Texas Intermediate (WTI) crude fell 53 cents, or 0.86%, to $61.04.
According to Bloomberg News, the Organization of the Petroleum Exporting Countries and its allied producers, collectively known as OPEC+, are debating whether to approve a sizable production increase at their upcoming June 1 meeting. One option on the table includes raising output by 411,000 barrels per day for July, though no final decision has been made, insiders revealed.
Earlier reports from Reuters indicated that OPEC+ plans to accelerate the pace of supply additions, potentially adding as much as 2.2 million barrels per day by November. The group has been gradually reversing previous production cuts, with incremental increases already occurring in May and June.
Harry Tchiliguirian of Onyx Capital Group commented that the market seems to be reacting to OPEC's shift away from protecting prices toward capturing greater market share. “It’s like ripping off a Band-Aid — done all at once,” he said.
Helima Croft, an analyst at RBC Capital, noted in a Wednesday briefing that the 411,000-bpd boost appears to be the “most probable” outcome, largely driven by Saudi Arabia. She highlighted a key question about whether voluntary cuts will be fully lifted before autumn, in line with the original plans.
Prices were already under pressure after Wednesday’s Energy Information Administration (EIA) report revealed unexpected builds in U.S. crude and fuel inventories, as crude imports reached a six-week peak and gasoline and distillate demand weakened. Crude stockpiles rose by 1.3 million barrels to 443.2 million for the week ending May 16, contrary to expectations of a 1.3 million-barrel drawdown.
Emril Jamil from LSEG Oil Research noted that these surprising inventory increases are likely to weigh on prices, particularly WTI, potentially encouraging more U.S. oil exports to Europe and Asia.
In related news, U.S. Secretary of State Marco Rubio announced via his personal social media account that Chevron’s license to operate in Venezuela is set to expire on May 27. Rubio described the license as a “pro-Maduro Biden oil license” that will lapse as scheduled next week.
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