(Bloomberg) — Oil fell for a third day as traders weighed the possibility that OPEC+ may fast-track its latest round of production hikes into a market already headed for oversupply.
Brent for December traded near $65 a barrel, after falling almost 5% in the past two days. This weekend, the alliance is slated to discuss potentially lifting output in three monthly installments of 500,000 barrels a day to recoup market share, a delegate said, though OPEC denied that’s part of the agenda.
Gauges of benchmark Middle Eastern crude came under pressure on Wednesday as the prospect of higher supplies from the region grows — prices in the region also slipped earlier in the week. That added to the bearish sentiment for futures.
In wider markets, traders were tracking a US government shutdown that began after Congress failed to meet a funding deadline of midnight Washington time. US equity futures edged lower, along with shares in Asia.
Crude capped a back-to-back monthly drop in September, as an earlier round of OPEC+ supply hikes bolstered expectations that global output will run ahead of demand. While stockpiling by China — the world’s largest oil importer — has lent some support to prices in recent quarters, the International Energy Agency has predicted there’ll be a record surplus next year.
“Our near-term balances now appear even more bearish than what we had previously characterized as “cartoonishly” oversupplied,” Macquarie analysts including Marcus Garvey wrote in a note. “Even though nominal supply increases have fallen short of announced levels, the shift in sentiment adds to bearish expectations,” they said of OPEC+ increases.
Investors also assessed a mixed US industry report on stockpiles. While nationwide oil holdings fell 3.7 million barrels last week, inventories of gasoline and distillates expanded, the American Petroleum Institute reported.