Oil prices fall on fears over higher OPEC supply, slower China demand

A convoy of U.S. military vehicles, arriving from northern Iraq, drives past an oil pump jack in the countryside of Syria’s northeastern city of Qamishli on Oct. 26. (AFP)

SULAIMANI (ESTA) — Oil prices dropped more than 1% on Tuesday as expectations that OPEC would agree to raise oil supply in a meeting this week added to pressure and worries over slowing demand in China dampened sentiment.

Brent crude fell 87 cents at $62.87 per barrel by 0605 GMT, after losing 1.1% the previous day. U.S. West Texas Intermediate (WTI) crude dropped 82 cents to $59.82 a barrel, having lost 1.4% on Monday.

Both benchmarks touched the lowest in more than one week.

Expectations that the Organization of the Petroleum Exporting Countries and its allies, a group known as OPEC+, would boost oil output from April are pushing prices lower, Reuters cited Satoru Yoshida, a commodity analyst with Rakuten Securities, as saying.

“Concerns over an increase in OPEC+ supply and an end of Saudi Arabia’s voluntary cut of 1 million barrels per day this month weighed on oil prices,” he told Reuters.

OPEC+ meets on Thursday and could discuss allowing as much as 1.5 million barrels per day (bpd) of crude back into the market.

The group is monitoring global inventories and the rate of drawdowns will be a factor discussed on Thursday.

Meanwhile, China’s factory activity growth slipped to a nine-month law in February, which may curtail Chinese crude demand and pressure oil prices.

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