Oil pared losses on Monday as a tight physical oil market offset the impact of OPEC+ hiking oil output more than expected in August as well as concern about the potential impact of U.S. tariffs on economic growth and oil demand.
The Organization of the Petroleum Exporting Countries and their allies, a group known as OPEC+, agreed on Saturday to raise production by 548,000 barrels per day in August, more than the 411,000 bpd hikes they made for the earlier three months.
Brent crude futures fell as low as $67.22 a barrel and by 0815 GMT were down 22 cents, or 0.3%, to $68.08. U.S. West Texas Intermediate crude was at $66.63, down 37 cents or 0.6%, up from an earlier low of $65.40.
“For now, the oil market remains tight, suggesting it can absorb additional barrels,” said UBS analyst Giovanni Staunovo.
The OPEC+ decision will bring nearly 80% of the 2.2 million bpd voluntary cuts from eight OPEC producers back into the market, RBC Capital analysts led by Helima Croft said in a note.
However, the actual output increase has been smaller than planned so far and most of the supply has been from Saudi Arabia, they added.
