Talk about lifting oil supply pushes oil prices down

London — Oil prices slipped on Tuesday as expectations that top producers would agree to raise oil supply in a meeting this week weighed on sentiment, already hit by concerns over slowing Chinese demand.

Brent crude dropped 24 US cents, or 0.4%, to $63.45 a barrel by 9.40am GMT, after losing 1.1% the previous day. US West Texas Intermediate (WTI) crude fell 18c, or 0.3%, to $60.46 a barrel, having lost 1.4% on Monday.

They both touched the lowest in more than six days, extending losses that started late last week.

Expectations that oil cartel Opec and its allies, a group known as Opec+, would boost oil output from April are pushing prices lower.

“The clamour among some members to refill their coffers, is likely to be a more powerful force then complaints externally about tight supplies. In the interests of Opec+ discipline, the Saudis are likely to accede,” said Jeffrey Halley, senior market analyst at Oanda.

“With the speculative market heavily long, the past three sessions’ falls look corrective ahead of Thursday’s meeting.”

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

Opec oil output fell in February as a voluntary cut by Saudi Arabia added to reductions agreed to under the previous Opec+ pact, a Reuters survey found, ending a run of seven consecutive monthly increases.

Meanwhile, China’s factory activity growth slipped to a nine-month low in February, which may curtail Chinese crude demand and pressure oil prices while oil buying from the world’s top importer has already eased lately.

“There are signs that the physical market is not as tight as futures markets suggest,” ING Economics said in a note.

“Chinese buying is reportedly easing, with demand expected to be weaker as we go into quarter two for refinery maintenance.” 

Reuters