Oil edges lower on oversupply concerns as OPEC+ set to raise output

By Yuka Obayashi
TOKYO, Aug 3 (Reuters) - Oil prices fell on Monday on
concerns about oversupply as OPEC and its allies, together known
as OPEC+, are due to pull back from production cuts in August
while an increase in COVID-19 cases worldwide raised fears of
slower pick-up in fuel demand.
Brent crude futures LCOc1 slid 8 cents, or 0.2%, to $43.44
a barrel by 0001 GMT while U.S. West Texas Intermediate (WTI)
crude futures CLc1 were down 12 cents, or 0.3%, at $40.15 a
barrel.
Brent posted a fourth month of gains in July and U.S. crude
posted a third as both rose from depths hit in April, when much
of the world was in lockdown due to the coronavirus pandemic.
"Investors are worried about supply gluts as the OPEC+ is
due to start reducing production cuts this month and a recovery
in oil prices from record lows is expected to encourage U.S.
shale producers to ramp up output," said Hiroyuki Kikukawa,
general manager of research at Nissan Securities.
"Also, fears over a resurgence in the coronavirus cases are
weighing on oil markets," he said, predicting that the prices
will stay in low $40s this week.
Oil output by the Organization of the Petroleum Exporting
Countries rose by over 1 million barrels per day in July as
Saudi Arabia and other Gulf members ended their voluntary extra
supply curbs on top of an OPEC-led deal, and other members made
limited progress on compliance. OPEC+ is set to step up output in August, adding about 1.5
million bpd to global supply. A Reuters poll showed on Friday that oil prices are set for
a slow crawl upwards this year as the gradual easing of
coronavirus-led restrictions buoys demand, although a second
COVID-19 wave could slow the pace of recovery.
The Australian state of Victoria declared a state of
disaster and authorities in the Philippines said they would
impose fresh restrictions in Manila this week, reflecting
worries around the world about getting the pandemic under
control.