Oil prices edged lower on Monday as investors weighed easing Middle East risks and the possibility of an OPEC+ output increase in August.

Both Brent and U.S. crude benchmarks posted their biggest weekly declines since March 2023 last week but rose for a second straight month, rising about 6% and 7%, respectively.

Brent futures settled down 16 cents, or 0.2%, at $67.61 a barrel and expired on Monday. The more active September contract expired at $66.74.

U.S. West Texas Intermediate crude settled down 41 cents, or 0.6%, at $65.11 a barrel.

The 12-day war that began with Israel targeting Iran's nuclear facilities on June 13 sent prices above $80 a barrel before falling back to $67. "This quickly engineered truce appears to be holding, so the prevailing supply risk premium continues to be pulled back rapidly," said John Kilduff, a partner at Again Capital.

Meanwhile, U.S. crude production hit a record 13.47 million barrels per day in April, up from 13.45 million barrels per day in March, according to data released by the Energy Information Administration as part of its Petroleum Supply Monthly series.

The record U.S. oil output added to the bearish sentiment on Monday, Kilduff added.

OPEC+ READY TO INCREASE PRODUCTION IN AUGUST

Four OPEC+ sources told Reuters last week that the group is ready to raise output by 411,000 barrels per day in August after similar increases in May, June and July.

If approved, the increase would bring total supply increases from OPEC+ to 1.78 million barrels per day for the year, equivalent to more than 1.5% of total global demand.

"I believe this potential supply squeeze is still below the price ceiling, leaving crude vulnerable to further weakness," said Ole Hansen, head of commodity strategy at Saxo Bank.

The oil producer group meets again on July 6.

However, Giovanni Staunovo, an analyst at UBS, said some market tightening was still in place despite the production increase. A Reuters survey found that OPEC oil output rose in May, but the increase was capped by cuts by countries that had previously exceeded their quotas. Meanwhile, Saudi Arabia and the United Arab Emirates made smaller increases than allowed.

Kazakhstan, which has consistently exceeded its quota set by OPEC+, could beat its previous oil output forecast by around 2% this year after increasing output at its largest oilfield in the Caspian Sea, Reuters calculations showed, based on data from state-owned energy company KazMunayGaz (KMGZ.KZ), opens new tab

A survey of 40 economists and analysts in June forecast Brent crude would average $67.86 a barrel in 2025, up from a May forecast of $66.98, while U.S. crude was seen at $64.51, above last month's forecast of $63.35. (alg)

Source: Reuters