NEW YORK: Oil prices eased about 1percent to a two-week low on Thursday on a surprise build in US crude inventories last week and expectations that OPEC+ producers will increase output targets at a meeting this weekend.
Brent crude futures fell 67 cents, or 1.0percent, to USD66.93 a barrel at 12:05 p.m. EDT (1603 GMT), while US West Texas Intermediate (WTI) crude fell 59 cents, or 0.9percent, to USD63.38. That put Brent on track for its lowest close since August 20. The US Energy Information Administration said energy firms added 2.4 million barrels of crude into storage during the week ended August 29. That was a surprise build in crude stocks compared with the 2.0-million-barrel withdrawal analysts forecast in a Reuters poll and was higher than the 0.6-million-barrel increase that market sources said the American Petroleum Institute trade group cited in its figures on Wednesday. “This is a little bit of a bearish report with that crude build,” said John Kilduff, a partner at Again Capital.
The EIA and API reported inventory data a day later than usual due to the US Labor Day holiday on Monday. Eight members of the Organization of the Petroleum Exporting Countries and allies like Russia in OPEC+ will consider further increases to production in October at a meeting on Sunday, two sources familiar with the discussions told Reuters. A potential OPEC+ production hike would send a strong signal that regaining market share takes priority over price support, said Tamas Varga, a senior analyst at PVM Oil Associates brokerage and consulting firm.
OPEC+ has already agreed to raise output targets by about 2.2 million barrels per day from April to September, in addition to a 300,000-bpd quota increase for the United Arab Emirates.
ECONOMIC DATA
In the world’s biggest economy, some shaky US macroeconomic data that showed new applications for jobless benefits increased more than expected last week, supporting expectations the Federal Reserve would cut interest rates this month. Investors have viewed the Fed’s September meeting as a lock for a quarter percentage point cut in what is now a 4.25percent to 4.5percent federal funds interest rate target range. Central banks, like the Fed, use interest rates to control inflation.
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