DTN Oil Update

Karim Bastati
DTN Analyst

VIENNA (DTN) -- Oil futures slid more than 1% Thursday morning on reports OPEC+ is considering another sizable production hike in July. The third consecutive monthly 411,000 bpd output increase added to oversupply concerns fueled by bleak global demand growth outlooks.

NYMEX-traded WTI for June delivery was down $0.94 bbl to trade near $60.63 bbl, and ICE Brent for July delivery fell $0.95 bbl to $63.96 bbl.

June RBOB gasoline futures shed $0.0354 to $2.1144 gallon, while the front-month ULSD futures contract was down $0.0289 to $2.1102 gallon.

The U.S. Dollar Index strengthened by 0.255 points to 99.690.

Bloomberg reported that OPEC+ delegates are considering raising production quotas by another 411,000 bpd in July at their June 1 meeting. The hike is part of the planned rollback of some 2.2 million bpd of voluntary adjustments implemented in addition to the group's production curtailment under the Declaration of Cooperation. This action would raise production targets more than 1.2 million bpd above levels three months ago, far outpacing demand growth at a time when the latter is set to be stunted by trade wars and slowing economic growth.

Artificial production curtailments have led to OPEC sitting on millions of barrels per day of spare production capacity, some of which can immediately supply additional volumes to the market. The U.S. Energy Information Administration in its May short-term energy outlook estimated OPEC spare production capacity at 4.73 million bpd last month.