Oil prices weakened on Thursday (October 2), extending their decline into a fourth day on concerns about oversupply in the market. Brent crude futures fell 37 cents, or 0.6%, to $64.98 a barrel at 11:27 GMT. Earlier in the session, prices hit their lowest level since June.

U.S. West Texas Intermediate crude fell 36 cents, or 0.6%, to $61.42 a barrel. The U.S. government shutdown raised uncertainty about the global economic outlook, while expectations of increased production by OPEC+, the Organization of the Petroleum Exporting Countries (OPEC) and allied producers, weighed on sentiment, said Hiroyuki Kikukawa, chief strategist at Nissan Securities Investment.

OPEC+ is likely to agree to increase oil production by 500,000 barrels per day in November, tripling the increase achieved in October, as Saudi Arabia seeks to regain market share, according to three sources familiar with the talks.

Jorge Montepeque, managing director of Onyx Capital Group, said some banks, such as Macquarie, had predicted a super-supply glut in the oil market, which has weighed on sentiment. G7 finance ministers said on Wednesday they would take steps to increase pressure on Russia by targeting those who continue to increase purchases of Russian oil and those who facilitate evasion.

The US will provide Ukraine with intelligence for long-range missile attacks on Russian energy infrastructure, two officials told Reuters on Wednesday, confirming an earlier Wall Street Journal report.

This would make it easier for Ukraine to attack refineries, pipelines, and other infrastructure with the aim of depriving the Kremlin of revenue and oil, the WSJ said.

"There are concerns in the market again that Russian oil could be disrupted," said Giovanni Staunovo, a commodities analyst at UBS. However, as long as there is no disruption, the impact on prices is likely to be minimal, he said.

Stockpiled demand from China, the world's largest crude importer, is also supporting oil prices, limiting declines, traders said. The Energy Information Administration (EIA) said on Wednesday that U.S. crude oil, gasoline, and distillate inventories rose last week due to weaker refining activity and weaker demand.

Crude oil inventories rose by 1.8 million barrels to 416.5 million barrels in the week ending September 26, compared with expectations in a Reuters poll for a 1 million-barrel increase. (alg)

Source: Reuters