Oil Losses Deepen As Sources Claim OPEC Increases Could Be Huge

Meanwhile, the U.S. reports bad news/good news on the output front: File Image/Pixabay

Oil on Tuesday extended the previous session's losses – albeit less severely – on lingering concerns that the Organization of the Petroleum Exporting Countries (OPEC) will exacerbate a perceived global supply surplus if it decides to increase output this coming Sunday.

As of 1722 GMT, Brent for November delivery declined 87 cents to $67.10 per barrel; the more active December contract fell 82 cents to $66.27.

West Texas Intermediate dipped 80 cents to $62.65 per barrel.

Three sources familiar with the matter previously told media that OPEC on Sunday will likely approve another output hike, in order to further regain market share.

Originally the hike was thought to be at least 137,000 barrels per day (bpd), but other sources on Tuesday said the amount would more likely be between 400,000 and 500,000 bpd over the next three months.

Ed Meir, analyst at Marex, said, "Although (OPEC+ is) under their quota anyway, the market still does not seem to like the fact that more oil is coming in."

Oil traders on Tuesday were presumably further worried by the latest disclosure from the Energy Information Administration, which undertook a major upward revision of U.S. oil output for July.

The IEA estimated that total liquids production hit a record 21.2 million bpd, nearly 500,000 bpd higher than the agency's initial weekly estimates.

However, the revised estimates also included boosts in total product supplied (a proxy for demand) as well as gasoline, diesel, and jet fuel consumption - which suggest U.S. demand hasn't declined as much as many critics assumed.

Looking ahead, one possible influence on oil trading in the near term was once again U.S. president Donald Trump, who gained the support of Israeli prime minister Benjamin Netanyahu for his Gaza peace proposal; however, it was unclear what Hamas reaction would be.