Brent sheds 1.5% on concerns OPEC+ may increase output

Brent crude fell 1.5% as the US market opened on Monday, deepening losses for second day in 3, on fears that the OPEC-Plus coalition will boost output in August, which might not benefit the market balance, especially in case demand remains weak due to the coronavirus.

Brent crude fell 1.5% to $42.42 a barrel, after opening at $43.06, and a session-high of $43.20. 

Brent rose 2.2% on Friday, posting the first daily gain in 3 days, in recovery attempts from a 1-week low of $ 41.34. 

Oil prices were lifted after the International Energy Agency raised its forecast for oil demand in 2020 by 400,000 barrels per day.

Oil prices have gained 1% during the past week, posting the second weekly straight weekly gain, on hopes for a quick global economic recovery from the coronavirus.

The OPEC-Plus Joint Ministerial Monitoring Committee is due to begin talks on Tuesday and Wednesday, to discuss recommendations on the next level cuts, after the compliance rate jumped to 107% in June vs. 77% in May.

Reuters quoted sources that the coalition is not intending to extend the ongoing cuts, and will be reduced to 7.7 million bpd as it was agreed upon previously, as demand and prices recovered.

The coalition started implementing a global production cut by 9.7 million bpd in May and June, and it was extended to July, which will be slashed to 7.7 million bpd from August until December, and will be lowered again to 5.7 million bpd in January 2021 until April 2022.

However, boosting the global supply by 2 million bpd starting from August, might not help in balancing the market, especially if the weak demand continues in some countries that are still amidst the fierce fight against the Covid-19 crisis.

As the world's largest oil consumer, the US, and other countries including India and Brazil, have not yet succeeded in containing the pandemic, with reemergence of new cases in Australia.