Crude Oil Prices Post First Weekly Loss in Three Weeks on Supply Outlook

Crude oil prices declined for the fourth consecutive session on Friday, capping the week with the first overall loss in three weeks, as expectations of further supply increases by the OPEC+ alliance continued to weigh on market sentiment.

Brent crude futures dropped by 22 cents or 0.3% to settle at $64.22 per barrel while U.S. West Texas Intermediate (WTI) fell 21 cents or 0.3% to close at $60.99 per barrel, as of 10:11 a.m. in Nigeria.

OPEC+ Output Expectations Drag Market

The losses followed reports that the Organization of the Petroleum Exporting Countries (OPEC) and its allies, collectively known as OPEC+, are preparing to increase oil production quotas by another 411,000 barrels per day (bpd) for July.

The group is scheduled to hold a critical meeting next week where the decision is expected to be formalized.

Reuters had earlier reported that OPEC+ may unwind the remainder of its 2.2 million bpd voluntary production cuts by the end of October.

This follows a phased output increase of 1 million bpd across April, May, and June.

“Brent is down along with expectations that OPEC+ will lift its production quota by another 411,000 bpd in July,” said Bjarne Schieldrop, Chief Analyst at SEB.

U.S. Inventory Build, Geopolitical Risks Offset

The downward pressure on oil was compounded by a large crude inventory build in the U.S., indicating softer demand and rising domestic supply.

Additionally, data from storage broker The Tank Tiger shows a surge in U.S. crude storage demand to levels not seen since the height of the COVID-19 pandemic, further stoking oversupply concerns.

Earlier in the week, geopolitical tensions briefly supported prices with reports suggesting that Israel is preparing potential strikes on Iranian nuclear facilities, and fresh sanctions on Russian oil trade from the European Union and the UK. However, these developments failed to sustain bullish momentum amid dominant supply-side signals.

Market Watch: Iran Talks and U.S. Rig Count

Investors are closely monitoring the outcome of the fifth round of nuclear negotiations between the U.S. and Iran, scheduled to take place in Rome. A successful agreement could unlock additional Iranian oil into the global market, exacerbating the current supply outlook.

Additionally, traders await the weekly U.S. oil and gas rig count data from Baker Hughes, a key forward-looking indicator for domestic production trends.

Outlook

With Brent and WTI trending lower and potential supply increases looming, analysts expect continued volatility in the near term.

The market’s focus remains on OPEC+ policy decisions, geopolitical developments and macroeconomic indicators that could affect global oil demand.

Oil traders are advised to factor in the rebalancing of production strategies and emerging supply risks as the market transitions into the second half of the year.