More Losses For Oil As OPEC Meeting And Output Hikes Loom

But Barclays forecasts an improved demand outlook: File Image/Pixabay

Despite significant swings in oil trading of late, a bearish undercurrent has remained firm and reasserted itself on Friday with more losses for crude ahead of the expected output increase from the Organization of the Petroleum Exporting Countries (OPEC).

Both pundits and insiders believe OPEC will agree to raise output by 411,000 barrels per day (bpd) this weekend, at minimum; reports on Friday were that the OPEC meeting would discuss an output hike even greater than the one currently on the table, and that Saudi Arabia is actively encouraging the cartel to expedite the supply process.

Sparse oil trading on Friday due to the U.S. Independence Day holiday resulted in Brent losing 50 cents at $68.30 per barrel by1700 GMT, and West Texas Intermediate also dipping by 50 cents to $66.50 per barrel.

Tamas Varga, analyst at PVM, echoed the concern of fellow analysts by saying of the possible OPEC decision, "If the group decides to increase its output by another 411,000 bpd in August, as expected, for the fourth successive month, oil balance estimates for the second half of the year will be reassessed and will suggest accelerated swelling in global oil reserves."

Friday's trading was also influenced by reports that Washington planned to resume nuclear talks with Iran next week, and that Tehran remained committed to the nuclear Non-Proliferation Treaty.

Susan Bell, senior vice president of downstream research at Rystad Energy, said, "The absolute fundamentals of the market are taking over; the risk premiums have gone out of the market, and the fundamentals are quite weak."

Still, patches of optimism dotted the oil market's gloomy landscape: contradicting Bell's assessment was Barclays, which said it raised its forecast for Brent prices by $6 to $72 per barrel for 2025 and by $10 to $70 per barrel for 2026 on an improved demand outlook.