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Investing.com - The OPEC+ producer group is expected to accelerate supply hikes later this year, possibly leading to a surplus in the fourth quarter that could place some downward pressure on oil prices, according to analysts at HSBC.
Since April, the Organization of the Petroleum Exporting Countries and its allies, a group known as OPEC+, has either made or announced output upticks totalling some 1.37 million barrels per day, or 62% of the 2.2 million of the total amount of supply it plans to put back into the market.
Strategists have suggested that these countries, which include producers like Saudi Arabia and Russia, are attempting to recapture some market share during a time of broader economic uncertainty stemming from global trade tensions and an ongoing transition to greener fuel sources.
At its May meeting, OPEC+ confirmed that it will raise its quota by 411,000 bpd for July, roughly equivalent to three monthly output increases and the same as May and June, the HSBC analysts said in a note to clients on Friday.
Meanwhile, recent data from the Energy Information Administration showed that global crude production is tipped to expand by 840,000 barrels per day this year and by 680,000 bpd in 2026.
Against this backdrop, the HSBC analysts led by Kim Fustier predicted that OPEC+ will pump up supply by 411,000 and 274,000 bpd in August and September, respectively -- a move the brokerage said would compress "five increases into two months".
Traditionally strong demand in the summer travel season is expected to absorb the impact of the OPEC+ output increases, the HSBC analysts said. But they flagged that the hikes "should tip the market into a bigger fourth quarter surplus than previously forecasted".
"Deteriorating fundamentals after summer raise downside risks to oil prices and our $65 per barrel assumption from fourth quarter onwards," the analysts added.
On Friday, oil prices were choppy as traders eyed concerns over slowing growth and weakening demand, but were still on track for the first positive week in three amid growing expectations that global supplies will be tighter than initially expected this year.
At 06:43 ET, Brent futures rose 0.1% to $65.41 a barrel, and U.S. West Texas Intermediate crude futures increased by 0.1% to $63.41 per barrel.