Oil prices dipped around 1% to hit a two-week low on Thursday, driven by an unexpected rise in US crude inventories last week and the anticipation that Opec+ might boost output targets at their upcoming weekend meeting.
Brent crude futures dropped 67 cents, or 1%, to $66.93 per barrel by 12:05 p.m. EDT (1603 GMT), while US West Texas Intermediate (WTI) crude decreased by 59 cents, or 0.9%, to $63.38.
This positioned Brent for its lowest closing since August 20.
The US Energy Information Administration reported that energy companies added 2.4 million barrels of crude to storage during the week ending August 29. This unexpected build in crude stocks contrasted with a 2.0-million-barrel drawdown projected by analysts in a Reuters poll and exceeded the 0.6-million-barrel increase reported by the American Petroleum Institute on Wednesday.
“This is a slightly bearish report due to the crude build,” noted John Kilduff, a partner at Again Capital.
The EIA and API delayed their inventory reports by a day due to the US Labor Day holiday on Monday. Eight members of Opec and allies like Russia in Opec+ will discuss potential production hikes for October at a meeting on Sunday, according to two sources familiar with the talks. A possible Opec+ production increase would signal a focus on market share over price support, explained Tamas Varga, a senior analyst at PVM Oil Associates.
Opec+ has already set plans to raise output targets by approximately 2.2 million barrels per day from April to September, with an additional 300,000-bpd quota increase for the UAE.
Economic Data
In the world’s largest economy, recent shaky US macroeconomic data showing a greater-than-expected rise in jobless claims last week has supported expectations that the Federal Reserve might cut interest rates this month. Investors have largely anticipated a quarter-point rate cut at the Fed’s September meeting, within the current 4.25% to 4.5% federal funds rate range.
Central banks like the Fed use interest rates to manage inflation. Lower rates can reduce consumer borrowing costs and stimulate economic growth and oil demand. In Germany, the largest European economy, leading economic institutes have lowered growth forecasts for 2025 and 2026, citing US tariffs and delays in benefits from increased public spending, which affect an export-dependent economy striving to regain momentum.
Japan and the US are nearing the final stages of discussions to lower tariffs on Japanese auto imports within 10-14 days following a US presidential executive order, as mentioned by a Japanese government source to Reuters. US President Donald Trump urged European leaders on Thursday to stop buying Russian oil, which he claims funds Moscow’s war against Ukraine, according to a White House official.
A reduction in Russian crude exports could potentially increase prices. Russia, which was the second-largest crude producer in 2024 after the US, is not waiting for increased European purchases. Russia’s leading oil producer Rosneft has secured an additional agreement to supply 2.5 million metric tons of oil per year to China via Kazakhstan, as reported by Interfax news agency citing Russian Energy Minister Sergei Tsivilev. In Nigeria, an Opec member, the gasoline unit at the 650,000 bpd Dangote refinery could be shut down for two to three months for repairs, IIR Energy noted in a client update on Thursday. In Venezuela, another Opec member affected by US sanctions, oil exports surged to a nine-month high of 900,000 bpd last month after US oil giant Chevron received a license allowing Venezuelan crude to re-enter the US market.
