Oil prices have edged down due to oversupply concerns as the Organization of the Petroleum Exporting Countries (OPEC) and its allies, known as OPEC+, is set to increase output this month.
Furthermore, global Covid-19 infections point towards a slower pick-up in the recovery of fuel demand, curtailing prices.
Brent crude futures fell by $0.26 at $43.26 a barrel, while the US West Texas Intermediate (WTI) crude futures fell $0.29 at $39.98 a barrel, Reuters reported.
OPEC+ is all set to step up output this month, adding about 1.5 million barrels per day (bpd) to global supply.
Nissan Securities research general manager Hiroyuki Kikukawa was quoted by the news agency as saying: “Investors are worried about oversupply as the OPEC+ is due to start reducing production cuts this month and a recovery in oil prices from record lows is likely to encourage US shale producers to ramp up output.
“Also, fears over a resurgence in the coronavirus cases are weighing on oil markets.”
Last month, the OPEC’s oil production increased by more than one million barrels per day (bpd) after Saudi Arabia, alongside other Gulf members, ended their voluntary extra supply cuts on top of the OPEC deal.
On 2 August, Russian Energy Ministry noted that the country’s oil output last month remained unchanged from June levels.
According to a Reuters poll, oil prices are set for a slight crawl upwards this year as coronavirus-led restrictions ease gradually.
Meanwhile, the Australian state of Victoria declared a ‘state of disaster’ on 2 August and imposed fresh lockdown measures after a surge in Covid-19 infections, raising concerns about the pandemic getting under control.