Crude Oil Prices Settle 2.7% Lower on Growing Fears of OPEC Output Hike

Investing.com – WTI crude oil prices settled lower as data pointing to an ongoing expansion in U.S. output and fears that Saudi Arabia and Russia were set to hike production weighed on sentiment.

On the New York Mercantile Exchange for July delivery fell 2.74% to settle at $65.06 a barrel, while on London’s Intercontinental Exchange, fell 3.41% to trade at $73.35 a barrel.

The number of oil rigs operating in the US increased for a fourth-straight week, rising by 1 to 863, according to data from energy services firm Baker Hughes, pointing to signs of an expansion in U.S. output.

The continued uptick in drilling activity comes as the Energy Information Administration said Wednesday U.S. oil output rose to a record 10.9 million barrels.

Crude oil prices had started the session on the back foot after Russia Energy Minister Alexander Novak said Thursday after talks with Saudi Energy Minister Khalid al-Falih that both nations agreed to gradually increase production.

Saudi Arabian Oil Minister Al Falih had previously attempted to temper investor fears of a sharp rise in production, insisting earlier this week the uptick in output would be reasonable and won’t be anything “outlandish.”

Traders fear that an uptick in global output would slow the rebalancing in oil markets as the production-cut agreement has proved effective in slashing the glut in global crude supplies.

In November 2016, OPEC and other producers, including Russia agreed to cut output by 1.8 million barrels per day (bpd) to slash global inventories to the five year-average.

The OPEC-led deal was renewed last year through 2018 and is expected to come under review at the oil-cartel’s next meeting on June 22.

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