Oil falls on uncertainty over future OPEC+ output

© Reuters. FILE PHOTO: Oil pump jacks are seen at the Vaca Muerta shale oil and gas deposit in the Patagonian province of Neuquen, Argentina, January 21, 2019. REUTERS/Agustin Marcarian/File Photo

By Noah Browning

LONDON (Reuters) -Oil prices fell on Thursday as OPEC+ confirmed it would only increase output in August as much as previously announced despite tight global supplies but left the market wondering about future output by not discussing plans for September.

Brent crude futures for September were down $2.02, or 1.8%, at $110.43 a barrel. The August contract, which expires on Thursday, was down $1.27, or 1.1%, at $114.99.

U.S. West Texas Intermediate (WTI) crude futures fell $2.24, or 2%, to $107.54.

The OPEC+ group of producers, including Russia, on Thursday agreed to stick to its output strategy after two days of meetings. The producer club avoided discussing policy from September onwards.

Previously, OPEC+ decided to increase output each month by 648,000 barrels per day (bpd) in July and August.

Sanctions on Russian oil since Russia's invasion of Ukraine have helped send energy prices soaring, stoking inflation and recession fears.

In the United States, fuel stocks rose as refiners ramped up activity to nearly full capacity, U.S. Energy Information Administration data showed, the highest at this time of year in four years.

Crude inventories, however, fell by 2.8 million barrels in the week to June 24, far exceeding the drop of 569,000 barrels forecast in a Reuters poll of analysts.

"The net drop in crude oil inventories was flattered by SPR (Strategic Petroleum Reserve) releases, while the gasoline stock jump is because U.S. refineries are running at over 95% capacity," said Jeffrey Halley, OANDA's senior market analyst for Asia Pacific.

But further disruptions to supply could limit price declines amid a suspension of Libyan shipments from two eastern ports while Ecuador output fell because of ongoing protests.

Exports of Ecuador's Oriente crude remain suspended under a force majeure declaration as the spread of anti-government protests hurt oil output, state-run Petroecuador said on Wednesday.

Meanwhile Russian Deputy Prime Minister Alexander Novak said on Thursday that a possible import price cap imposed on Russian oil could push prices higher.