Oil prices edge higher, but set for sharp weekly decline ahead of OPEC+ meet

Investing.com-- Oil prices edged higher Friday after hitting over four-month lows, but remained on track for a steep weekly loss due to oversupply worries sparked by reports that OPEC+ would raise output again next month.

At 08:00 ET (12:00 GMT), Brent Oil Futures expiring in December rose 0.3% to $64.31 per barrel, while West Texas Intermediate (WTI) crude futures also gained 0.3% to $60.66 per barrel.

Both benchmarks slid nearly 2% to their lowest level since early June in the previous session, and were poised to drop around 8% for the week.

OPEC+ meeting looms

Traders remain wary after reports earlier this week suggested that OPEC+ could increase output by as much as 500,000 barrels per day in November, three times the volume added this month. 

The move would mark another step in the group’s unwinding of production cuts, with September output already up 330,000 bpd to 28.40 million bpd, according to a Reuters survey.

Saudi Arabia and other producers are seeking to recapture market share, but analysts warn the additional barrels could swamp a market already showing signs of weaker consumption.

“Another large OPEC+ hike risks overwhelming demand just as refinery maintenance and slowing economic growth weigh on crude,” ANZ analysts said in a note.

The group’s next ministerial meeting is scheduled for Oct. 5, where the November plan is expected to be finalised. Any signal of deeper or faster supply additions could drive further downside in prices.

"Brent oil prices have fallen to $65, reaching our 0-3mth point price target, as OPEC+ signaled another month of production increases and Iraq is seeing KRG oil exports resume via Turkey, “ said analysts at Citi, in a note dated Oct. 2.

“This came after last week’s intraday high of almost $70 on continued Ukrainian attacks on Russian refineries and oil export infrastructure.”

U.S. shutdown worries pressure oil

Oil markets are also contending with political uncertainty in the U.S, where a federal government shutdown entered its third day. 

The shutdown saw roughly 800,000 "non-essential" federal workers being furloughed, and key economic reports suspended, clouding the outlook for demand.

The absence of timely data on jobs, inflation, and manufacturing is complicating assessments of U.S. consumption trends and Federal Reserve policy. 

The shutdown could dent household spending in the near term and undermine confidence, curbing demand growth for fuel.

Ayushman Ojha contributed to this article