Oil prices dip as OPEC+ plans supply boost amid China's weak demand
Oil prices on the New York fuel exchange are extending losses due to signals that the OPEC+ cartel will increase crude supplies starting in October. Demand is also negatively impacted by signals from China’s economy, which is the largest importer of "black gold."
A barrel of West Texas Intermediate crude for October deliveries costs $76.07 on NYMEX in New York, down by 0.65%. Meanwhile, Brent for next month on ICE is priced at $76.37 per barrel, down by 0.73%, after losing over 2% on Friday.
There are signals in the markets that OPEC and its allies—OPEC+, which includes Russia—are gradually increasing crude oil supplies by 180,000 barrels per day as part of restoring production, which was limited based on agreements from 2022.
At the moment, there are no signs that such actions by the Organization of the Petroleum Exporting Countries would be postponed, anonymous OPEC+ officials claim.
The OPEC+ cartel is invested in high oil prices. Therefore, the organization has stipulated that if necessary, it can halt the supply increase should crude prices "erode." Experts believe this is a likely scenario. The fragile Chinese economy, which has not improved despite many phases of economic stimulus, poses a threat to oil demand.
Will China spoil OPEC's plans, expanded by Russia?
Official PMI data published on Saturday from Chinese industry showed that the PMI index fell to 49.1 points in August from 49.4 points in July, according to China’s National Bureau of Statistics. Analysts had forecasted 49.5 points.
This marks the fourth consecutive decline in this indicator. The crisis in China’s real estate sector is also deepening, raising concerns that the world's largest oil importer might struggle to achieve its GDP growth target this year.
"Concerns about demand in China will definitely not disappear anytime soon," comments Warren Patterson, head of commodity strategy at ING Groep NV.
