Crude oil futures down around 3% on week amid rising output fears

London (Quantum Commodity Intelligence) - Benchmark crude oil futures dropped around 3% in the week ending April 9, as the market continued to trend lower on concerns that demand will not keep up with rising production.

North Sea Brent futures for June closed the week $1.91/b lower at $62.95/b, down 2.94% on the week. US May WTI futures settled 2.13/b lower at $59.32/, down 3.47%. Both markets finished at the lowest weekly settlement price since February 5.

Meanwhile, the keenly watched Brent/WTI spread was $0.20/b wider on the week at around $3.60/b.

Crude oil prices have fallen by around $8/b since March 8 when Brent settled above $71/b as further lockdowns across Europe and increased COVID-19 cases in parts of Asia dampened optimism on the demand recovery.

Analysts have flagged concerns that demand will not keep up with increased supplies from the OPEC+ group, plus the possibility of increased Iranian exports if sanctions against Iran are eased.

Talks took place in Vienna this week between Iran and the international community to strike a nuclear deal.

At the April 1 OPEC+ meeting, the producer group agreed to start softening production curbs of 350,000 barrels per day (bpd) in May, 350,000 bpd in June, and a further 400,000 bpd for July.

OPEC+ had cut output by nearly 7 million bpd in response to COVID-19, while Saudi Arabia made an extra 1 million bpd voluntary output cut, leaving OPEC+ production capacity at around 8 million b/d.