Crude oil prices are headed for a weekly drop following reports that OPEC+ plans to raise its output by 411,000 barrels per day in July. This move extends the group’s accelerated easing of production cuts.
At the time of writing, Brent crude traded at $64.06 per barrel, while West Texas Intermediate (WTI) stood at $60.80 per barrel. Both benchmarks are down roughly 2% since Monday. A stronger U.S. dollar has also weighed on oil prices this week.
The dollar gained momentum after Congress approved a major federal budget deal. The agreement includes deep spending cuts, especially for the energy sector and energy transition programs. Subsidies for wind, solar, and electric vehicles are mostly eliminated, a change industry experts say could stall the U.S. energy transition. However, the bill also contains significant tax cuts, which boosted investor confidence in the dollar.
Adding to the bearish outlook, U.S. crude oil storage demand has surged. Traders expect increased supply from OPEC+, prompting a rise in storage needs. Data from storage broker The Tank Tiger shows demand nearly doubled in the past month, reaching 3 million barrels in June. The Tank Tiger’s COO said this was the largest jump in crude storage demand since the COVID-19 pandemic began.
Further pressure on prices came from the latest U.S. crude inventory report. The Energy Information Administration (EIA) recorded a build of 1.3 million barrels last week. Rising stockpiles generally signal weaker demand, which dampens trader sentiment.
Overall, the combination of higher OPEC+ output, a stronger dollar, rising storage demand, and growing U.S. inventories points to lower crude oil prices this week.
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