Oil Drops Below $78 as OPEC+ Eyes Output Boost
Oil fell below $78 a barrel on Friday on the prospect that OPEC+ producers might step up a planned increase in output to ease supply concerns, although crude remained in sight of a three-year high reached this week.
The Organization of the Petroleum Exporting Countries (OPEC) and allies, known as OPEC+, meets on Monday. Four OPEC+ sources said on Thursday adding more oil than planned was being looked at as a scenario, without giving details.
OPEC+ is unwinding its production curbs at a rate of 400,000 barrels per day a month.
Beyond October, “a faster ramp-up in OPEC+ production cannot be excluded,” said Stephen Brennock of oil broker PVM. “The prospect of $80 oil does not sit well with the producer group.”
Brent crude fell 58 cents, or 0.7%, to $77.73 at 0820 GMT, heading for a weekly decline after three weeks of gains. U.S. West Texas Intermediate (WTI) slipped 58 cents to $74.45, set for a sixth consecutive week of rises.
The price of Brent has risen 50% this year and reached a three-year high of $80.75 on Tuesday.
Although OPEC+ producers are unwinding their output curbs, they are still withholding millions of barrels of capacity and facing pressure from consumers such as the United States and India to produce more to help lower prices.
Oil is finding support as a surge in natural gas prices globally prompts power producers to move away from gas. Generators in Pakistan, Bangladesh and the Middle East have started switching fuels.
Crude also came under pressure on Friday from a strong U.S. dollar, and a rise in U.S. crude inventories in weekly figures as production rebounded from recent storms.
A strong dollar makes oil more expensive for other currency holders and tends to reflect lower investor risk appetite. The dollar hit a one-year high this week.
(Additional reporting by Sonali Paul and Florence Tan; editing by Jason Neely)