By Scott DiSavino
NEW YORK (Reuters) -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, while traders expected more oil supply to come on the market with a planned output boost by OPEC+ next month.
Brent crude futures fell 64 cents, or 1.0%, to $65.39 a barrel at 1:03 p.m. EDT (1703 GMT), while U.S. West Texas Intermediate (WTI) crude fell 55 cents, or 0.9%, to $61.82.
That put Brent on track for its lowest settlement since June 5, while WTI was headed for its lowest close 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 were on track for their lowest close since September 2024.
Traders expect OPEC+ to boost production in November by about the same as the 500,000 barrels per day hike in September, even as U.S. and Asian demand start to decline, Rystad analyst Janiv Shah said.
OPEC+, the Organization 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, three sources familiar with the talks said.
However, OPEC wrote on X that media reports of plans to raise output by 500,000 bpd were misleading.
An OPEC+ panel stressed the need for achieving 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, OPEC said in a statement.
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. [EIA/S] [API/S]
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.
U.S. GOVERNMENT SHUTDOWN
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.
U.S. private payrolls dropped by the most in 2-1/2 years in September, the ADP National Employment report showed on Wednesday, but this is not a true picture of the labor market, which has stagnated as businesses remain cautious about hiring.
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.
Elsewhere in Russia, firefighters brought a fire under control at a major oil refinery in the Yaroslavl region northeast of Moscow, the local emergencies ministry said on Wednesday. The officials said the fire had nothing to do with Ukrainian drones.
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.
(Reporting by Scott DiSavino in New York, Seher Dareen in London and Mohi Narayan in New Delhi. Additional reporting by Georgina McCartney in Houston and Ahmad Ghaddar in London. Editing by Alexandra Hudson, Aidan Lewis, Mark Potter, David Gregorio and Diane Craft)
