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Oil falls as OPEC+ increases production


Brent oil futures were down 1.06% to $79.94, while crude oil WTI futures were down 1.01% to $77.06

Oil was down on Thursday morning in Asia, with a draw in U.S. crude oil supplies smaller than expected. Doubt also remains as to whether the Organization of the Petroleum Exporting Countries and allies, known as OPEC+ will be able to meet its output hike for February.

Brent oil futures were down 1.06% to $79.94 by 3:17 AM GMT and crude oil WTI (West Texas Intermediate) futures were down 1.01% to $77.06.

Wednesday’s U.S. crude oil supply data from the U.S. Energy Information Administration (EIA) showed a draw of 2.144 million barrels for the week ended Dec. 31.

Crude oil supply data from the American Petroleum Institute (API) released the day before, showed a draw of 6.432 million barrels.

Meanwhile, OPEC+ agreed on Tuesday to increase another 400,000 barrels per day (bpd) of supply for February. However, some investors are not confident that the agreed output hike will be met.

Oil ended 2021 on a strong note as the rollout of vaccines helped economies to reopen, boosting energy demand and allowing OPEC+ to maintain its monthly output hikes. However, some members of the organisation have struggled to meet their targets, leading to declines on the overall expected returns of supply.

Outside of Saudi Arabia, OPEC is seeing a challenge in increasing production, Tortoise portfolio manager Matt Sallee told Bloomberg.

The more months we roll forward and OPEC is unable to demonstrate adding 400,000 barrels a day of supply, it could start to spook the market, he added.

Adding pressure on oil prices, the minutes from the U.S. Federal Reserve’s December meeting indicated the central bank is likely to interest rates quicker than expected. In Asia Pacific, Hong Kong tightened its COVID-19 restrictive measures on Wednesday.

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