Oil edges lower on oversupply concerns as OPEC+ set to raise output
Oil prices fell on Monday on concerns about oversupply as OPEC and its allies, together known as OPEC+, are due to pull back from production cuts in August while an increase in COVID-19 cases worldwide raised fears of slower pick-up in fuel demand.
Brent crude futures slid eight cents, or 0.2 percent, to 43.44 U.S. dollars a barrel by 0001 GMT while U.S. West Texas Intermediate (WTI) crude futures were down 12 cents, or 0.3 percent, at 40.15 U.S. dollars a barrel.
Brent posted a fourth month of gains in July and U.S. crude posted a third as both rose from depths hit in April, when much of the world was in lockdown due to the coronavirus pandemic.
"Investors are worried about supply gluts as the OPEC+ is due to start reducing production cuts this month and a recovery in oil prices from record lows is expected to encourage U.S. shale producers to ramp up output," said Hiroyuki Kikukawa, general manager of research at Nissan Securities.
"Also, fears over a resurgence in the coronavirus cases are weighing on oil markets," he said, predicting that the prices will stay in low $40s this week.
Oil output by the Organization of the Petroleum Exporting Countries rose by over one million barrels per day in July as Saudi Arabia and other Gulf members ended their voluntary extra supply curbs on top of an OPEC-led deal, and other members made limited progress on compliance.
OPEC is set to step up output in August, adding about 1.5 million bpd to global supply.
A Reuters poll showed on Friday that oil prices are set for a slow crawl upwards this year as the gradual easing of coronavirus-led restrictions buoys demand, although a second COVID-19 wave could slow the pace of recovery.
The Australian state of Victoria declared a state of disaster and authorities in the Philippines said they would impose fresh restrictions in Manila this week, reflecting worries around the world about getting the pandemic under control.