Oil continues to drop, US crude falls below $70 after OPEC+ agrees to increase output

Oil prices continued to drop as the US market opened on Monday, deepening losses for the fourth straight day, and hit a 6-week low, with the US crude falling below $70 a barrel and Brent below $71, after OPEC-Plus agreed on an output hike starting from next August, and amid renewed oversupply concerns, especially after the US oil production accelerated.

US crude fell 3.4% to the lowest since June 10 at $68.99 a barrel, after opening at $71.43, and hit a high at $71.66, and Brent crude fell 2.6% to the lowest since June 10 at $70.92 a barrel, after opening at $72.81, and hit a low at $73.32.

The US crude lost 0.1% Friday, and Brent crude fell 0.3%, in the third straight daily loss, after the Saudi-Emirati dispute over OPEC-Plus production policy was resolved.

Oil prices lost around 3.75% last week, the second weekly loss in a row, due to renewed global supply and demand concerns.

The OPEC Plus alliance announced after an emergency meeting on Sunday to increase output by 400,000 barrels per day starting from August, and extended the expiration date of the cuts until the end of 2022 instead of April 2022.

The alliance decided to raise the production baseline from 43.8 million bpd to 45.5 million bpd starting from May 2022, and raised the UAE production baseline to 3.8 million bpd from 3.5 million bpd, with Saudi Arabia and Russia production baseline rising by 500,000 bpd each from 11 to 11.5 million bpd.

The current cuts are now nearly 6 million bpd, which was planned to end in April 2022, but will be lowered to 5.6 million bpd until the end of 2022 after the new pact, and the agreement will be reviewed monthly.

While the US output rose 300,000 barrels the past two weeks, with the total at the highest level since May 2020 at 11.4 million barrels per day.