Oil prices slid for a third day in a row to a 16-week low on Wednesday as a U.S. government shutdown fed worries about the global economy. Traders expected more oil supply to come on the market with a planned output boost by OPEC+ next month.
According to Reuters, Brent crude futures fell 68 cents, or 1.0 per cent, to settle at $65.35 a barrel, while U.S. West Texas Intermediate (WTI) crude fell 59 cents, or 0.9 per cent, to settle at $61.78.
Those were the lowest closes for Brent since June 5 and for WTI since May 30.
U.S. oil production growth will stall if prices stay near $60 per barrel, as fewer drilling sites are profitable at that level, the CEO of Diamondback Energy (FANG.O), one of the country’s top oil producers, said on Wednesday.
U.S. gasoline futures closed at their lowest in almost a year in other energy markets.
Rystad analyst Janiv Shah said traders expect OPEC+ to boost production in November by about the same amount as the 500,000 barrels per day hike in September, even as U.S. and Asian demand decline.
Three sources familiar with the talks said OPEC+, the Organisation of the Petroleum Exporting Countries (OPEC), and allied producers like Russia could agree to raise oil production by up to 500,000 bpd in November, triple the increase made for October, as Saudi Arabia seeks to reclaim market share.
However, OPEC wrote on X that media reports of plans to raise output by 500,000 bpd were misleading.
OPEC said in a statement that an OPEC+ panel stressed the need to achieve full compliance with oil output agreements and extra output cuts that some members are required to make to compensate for earlier exceeding quotas at a meeting on Wednesday.
Oil prices were also pressured by a bigger-than-expected increase in U.S. crude inventories last week.
The U.S. Energy Information Administration (EIA) said energy firms added 1.8 million barrels of crude into inventories during the week ended September 26, exceeding the 1.0-million-barrel build analysts forecast in a Reuters poll. ,
On Tuesday, sources said the American Petroleum Institute trade group had reported a 3.7-million-barrel draw for the week.
“Crude stocks rose following a drop in exports, which were not as hot and could signal some weak demand … we already had a pretty big sell-off on the government shutdown and expectations that that could slow the economy and hurt demand,” said Phil Flynn, a senior analyst at Price Futures Group.
The U.S. government shut down much of its operations on Wednesday as deep partisan divisions prevented Congress and the White House from reaching a funding deal. Government agencies have warned this would halt the release of the closely watched September employment report, among other things.
The White House warned that worker layoffs are imminent as the first day of the government shutdown unfolded, even as Vice President JD Vance insisted no final decisions have been made.
U.S. manufacturing activity edged up in September, though new orders and employment were subdued as factories grappled with the fallout from President Donald Trump’s sweeping tariffs.
In Asia, the world’s biggest oil-consuming region, data on factory activity added to concerns about fuel demand, as manufacturing activity contracted across most major economies in September.
Focus was also shifting to the supply and export disruption in Russia due to Ukrainian assaults, PVM Oil Associates’ analyst Tamas Varga said.
Russian Deputy Prime Minister Alexander Novak said the situation with the supply of fuel on the domestic market is under control on the whole, while some regions are experiencing shortages of the fuel.
Urals crude differentials to dated Brent held steady on Wednesday, while oil loadings from Russia’s three key western ports jumped by 25 per cent in September from August, as refinery outages caused by Ukrainian drone attacks freed up more crude.
In Venezuela, an OPEC member under U.S. sanctions, oil exports averaged 1.09 million bpd in September, the highest monthly level since February 2020, according to shipping data and documents from state-run energy company PDVSA.
