HOUSTON (Reuters) -Oil prices edged lower on Monday as worries of an oversupply outweighed geopolitical tensions in Russia and the Middle East.
Brent crude oil futures dipped 24 cents, or 0.4%, to $66.44 a barrel by 11.01 a.m. ET (15.01 GMT). Brent has traded between $65.50 and $69 a barrel since early August.
U.S. West Texas Intermediate crude contract for October, expiring on Monday, was at $62.49 a barrel, down 19 cents, or 0.3%. The more actively traded second-month contract was down 26 cents, or 0.5%, at $62.12.
“Traders are back to focusing on a possibly over-supplied global oil market that is soon to come, unless the US & EU can agree on harsher tariffs on countries that purchase Russian crude,” said Dennis Kissler, senior vice president of trading at BOK Financial.
Iraq, OPEC’s second-largest producer, has increased oil exports under an OPEC agreement, state oil marketer SOMO said. It also expects September’s exports to range from 3.4 million to 3.45 million barrels per day.
Kuwait’s crude oil production capacity stands at 3.2 million barrels per day (bpd), oil minister Tariq Al-Roumi said in an interview with local newspaper Al Qabas, the highest assessment in more than 10 years.
U.S. equities, which often move in tandem with oil, dipped on Monday amid a visa crackdown and guesswork about the Fed’s next interest rate moves.
Federal Reserve officials cast doubt on Monday on the need for further rate cuts at a time when inflation remains above the central bank’s 2% target and the job market remains near full employment. Lower borrowing costs typically boost oil demand.
Tensions rose in the Middle East over several Western nations recognising a Palestinian state as well as in Eastern Europe after Estonia said Russian fighter jets had entered its airspace without permission on Friday. But none of these developments resulted in an immediate oil supply disruption.
Brent and WTI settled down more than 1% on Friday to mark a slight decline last week as worries about large supplies and declining demand weighed on sentiment.
“The setup for the oil market is that global oil demand is set to taper off from Q3 to Q4 and again to Q1-26. At the same time production by OPEC is on a rising path,” said SEB analysts.
“The big question is of course if China will stockpile the increasing surplus or whether the oil price will be pushed lower into the 50ies. We believe the latter.”
Iraq has also given preliminary approval to a plan to resume pipeline oil exports from its semi-autonomous Kurdistan region through Turkey, sources told Reuters.
(Additional reporting by Florence Tan and Mohi Narayan; Editing by Bernadette Baum, Joe Bavier, William Maclean)
