Oil Extends Losses As Investors Weigh Possible OPEC Output Increase

Meanwhile, Chevron braces for ouster from Venezuela: File Image/Pixabay

Oil on Thursday ignored geopolitical tensions and extended its downward trajectory, with traders citing the same reasons of stockpile builds in the U.S. and the perception of weakening demand as the lead causes.

Exhibiting the hangover of news that U.S. crude inventories rose by 1.3 million barrels in the week ended May 16 while gasoline stocks rose by about 800,000 barrels, West Texas Intermediate settled down 37 cents at $61.20 per barrel.

Brent settled down 47 cents at $64.44 per barrel.

Analysts also expressed concern that the Organization of the Petroleum Exporting Countries (OPEC) might decide at its June 1 meeting to enact another large output increase of 411,000 barrels per day for July.

John Kilduff, founding partner at Again Capital, said, "This OPEC+ decision is going to be pretty weighty, and it is not helping that Kazakhstan did not come through last month," referring to that country's oil production rising by 2 percent in May.

Thursday's losses were said to be dampened substantially by the impending expiry of Chevron's license to operate in Venezuela, according to U.S. secretary of state Marco Rubio; however, Phil Flynn, senior market analyst at Price Future Group Inc. pointed out that, "These deadlines have been extended in the past, so maybe the market is just not convinced yet."

In other oil news on Thursday, Moody's Investors Service research concluded that China's crude demand is expected to peak within the next 3–5 years, due to slowing economic growth, while India will continue to lead in global oil demand growth until at least 2030, due to a rising population and expanding infrastructure.