Oil Prices Head for Weekly Loss

Summary

OPEC+ could further boost output in November, sources say
Analysts predict oil market surplus in fourth quarter and beyond
Chevron refinery fire unlikely to affect broader market

LONDON, Oct 3 (Reuters) – Oil prices were stable on Friday but remained on course for a weekly loss of about 7-8% after news of potential increases to OPEC+ supply.

Brent crude futures were up 32 cents, or 0.5%, at $64.43 a barrel by 0958 GMT. U.S. West Texas Intermediate crude was up 32 cents, or 0.53%, at $60.80.

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For the week, Brent was trading 8.1% down and WTI was on course for a 7.5% decline.

“We are in a wait-and-see mode for what the OPEC+ Group of Eight will decide over the weekend,” said UBS analyst Giovanni Staunovo, adding that Friday’s modest price recovery is likely to be attributable to positive risk sentiment.

Eight members of OPEC+ could agree to raise production in November by 274,000-411,000 barrels per day (bpd), or two or three times higher than the October increase, sources told Reuters on Tuesday, as Saudi Arabia seeks to reclaim market share.

Potentially higher OPEC+ supply, slowing global crude refinery runs owing to maintenance and a seasonal dip in demand in the months ahead are set to weigh on market sentiment, analysts say.

“Demand indicators have fallen a touch through the Atlantic Basin as summer demand comes to an end. The oversupplied implied balance from a fundamentals perspective starting in October is gaining ground,” said Rystad Energy analyst Janiv Shah.

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JPMorgan analysts, meanwhile, said they believed that September marked a turning point, with the oil market heading towards a sizeable surplus in the fourth quarter and into next year.

Elsewhere on Friday, a fire broke out at Chevron’s El Segundo refinery overnight, though a county official said the flames had been confined to one area. The refinery is one of the largest on the U.S. West Coast, with capacity of 290,000 bpd.

It was not immediately clear if there was any impact on production, but the impact on oil prices could be limited, analysts said.

“The El Segundo refinery is on the West Coast, which is isolated from the rest of the U.S. as far as domestic oil flow is concerned; therefore, its impact is most likely negligible,” said PVM analyst Tamas Varga.

Saxo Bank analyst Ole Hansen said: “Apart from lifting already elevated gasoline prices in California, I don’t think the fire should have a broader market impact.”