Investing.com - Oil prices settled sharply lower Thursday as Saudi Arabia reportedly will abandon its unofficial $100 price target as it looks set to proceed with an OPEC+ to boost output in December.
At 2:30 p.m. ET (1830 GMT), Brent oil futures fell 2.7% to $70.97 a barrel, while West Texas Intermediate crude futures dropped 2.9% to settle at $67.67 a barrel.
Saudi prepares to boost oil output in December
The Financial Times reported that Saudi Arabia, the world's top oil exporter, is preparing to abandon its unofficial price target of $100 a barrel for crude as it prepares to increase output.
The Organization of the Petroleum Exporting Countries, which is traditionally lead by the Sauids, along with the group's allies including Russia, together known as OPEC+, have been cutting oil output to support prices.
Earlier this month, the group decided to push back plans to gradually phase out the additional cuts of 2.2 million bpd over the course of a year by two months to December.
Sources told the FT that OPEC+ os set to proceed with plans to increase oil output on September despite the recent fall in oil prices as the impact would likely be blunted by some pledges from members to make deeper cuts to comply offset the production that was in excess of the agreed quotas.
Also adding to increase supply concerns media reports said that delegates from Libya’s east and west factions had agreed over the process of appointing a new central bank governor - a move that is expected to resolve a crisis that saw most of the country’s oil production shut down.
Production disruptions in the country had taken at least 1 million barrels per day of production offline, with any resumption in production likely to herald less tight markets.
US inventories shrink more than expected
News of potentially more supply hitting the market has overshadowed increased tensions in the Middle East, as Israel kept up its offensive against Hamas and Hezbollah, increasing the risk of a hit to supply from this oil-rich region..
Additionally, data released Wednesday showed a substantially bigger-than-expected, 4.47 million barrel (mb) draw in U.S. inventories.
Gasoline and distillate inventories also shrank, indicating that U.S. demand remained strong.
The draw came amid some disruptions in U.S. oil production, especially due to adverse weather conditions in the Gulf of Mexico. Production in the region was taken offline due to a hurricane earlier in September, and is expected to face further disruptions as Hurricane Helene passes through the Gulf this week.
Still, prices were sitting on strong gains this week, especially after top importer China announced a string of stimulus measures aimed at shoring up growth. U.S. oil inventories also shrank more than expected, presenting a tight outlook for markets.
(Peter Nurse, Ambar Warrick contributed to this article.)