Oil prices fall as OPEC boosts supplies

Oil prices sank to the lowest in over one month, as rising United States (U.S.) inventories, higher output from the Organisation of Petroleum Exporting Countries (OPEC) and Russia’s pressure impact the market.

Futures fell for the third day in New York, losing as much as 1.1 per cent to hit their lowest level since June 22, but U.S. government’s data showed a surprise gain in nationwide stockpiles on Wednesday.

OPEC’s July output climbed as Saudi Arabia pumped near-record volumes, while Russia boosted production to unprecedented levels since it joined the cartel in a coordinated cut in January 2017.

The higher supplies from OPEC and Russia are contributing to growing signs of a new glut in the oil market and that is adding to concern a trade war between the U.S. and China could curb economic growth and limit energy demand, which drove crude to the biggest decline in two years last month.

Head of Commodity Strategy at Saxo Bank A/S in Copenhagen, Ole Sloth Hansen, said: “We are seeing continued negative sentiment, driven by worries over growth and demand.”

West Texas Intermediate crude for September delivery fell to as low as $66.92 per barrel and traded at $67.35 on the New York Mercantile Exchange at 8:57am local time.

The contract declined $2.47 in the previous two sessions.

Total volume traded yesterday was about 28 per cent below the 100-day average.

Brent for October settlement fell 34 cents to $72.05 a barrel on the London-based ICE Futures Europe exchange, after dipping $1.82 on Wednesday.

The global benchmark traded at $5.86 premium to WTI in the same month after the spread widened to as much as $11.43 in June.

U.S. crude inventories rose 3.8 million barrels last week, according to data from the Energy Information Administration.

That compares with a forecast for a 3-million-barrel decline in a Bloomberg survey of analysts. Stockpiles at the Cushing storage hub in Oklahoma fell for an 11th straight week.

Traders are also watching rising output from OPEC and its allies following their June accord to increase supply, having faced acute pressure from the U.S. President, Donald Trump, to calm oil prices.

Saudi Arabia’s production increased by 230,000 barrels a day in July to 10.65 million barrels per day.

The kingdom’s higher supply, along with that from Nigeria and Iraq, pushed up OPEC’s total output by 300,000 barrels a day last month.

Meanwhile, Russia’s Energy Minister, Alexander Novak said his country boosted its production in July to just below the post-Soviet record set in October 2016.

It produced about 11.21 million barrels per day, an increase of 140,000 from a month earlier, according to Bloomberg calculations based on the ministry’s data.