Oil prices fell in early European trading on Thursday morning, on the prospect of an increase in supply from major oil producing countries, amid lingering concerns about demand.
Brent crude futures (BZ=F) declined 1.4% to $64.01 a barrel, while West Texas Intermediate futures (CL=F) were down 1.5% at $60.68 a barrel.
The fall in oil prices came after Bloomberg reported that members of the Organization of the Petroleum Exporting Countries and their allies — known as OPEC+ — were discussing making a third consecutive increase in output, with a decision set to be made at the group's meeting on 1 June.
According to the report, one of the options in discussion was an output hike of 411,000 barrels a day for July, which would be triple the amount initially planned.
A spokesperson for OPEC had not responded to Yahoo Finance UK‘s request for comment at the time of writing.
Read more: FTSE 100 LIVE: European stocks fall as UK government borrowing jumps to £20.2bn in April
Oil prices are trading at their lowest levels since 2021, as US president Donald Trump's trade war has prompted fears of a global economic slowdown, with concerns that this could weigh on demand for fuel.
In addition, fears about growth in US debt appeared to have taken hold across financial markets on Thursday. This comes as a large tax-cut and spending bill from the Trump administration goes through US Congress, while weak demand for an auction of US debt added to concerns.
“Oil prices have dropped back as concerns about the US debt pile added another layer of wariness about the outlook for the global economy and energy demand,” said Susannah Streeter, head of money and markets at Hargreaves Lansdown.
“This is colliding with expectations that OPEC+ members may opt for another large production increase, increasing the amount of crude washing around world markets. Traders already had an eye on the extra supplies around given that there was a larger than forecast increase in US crude stockpiles last week.”
The pound was little changed against the dollar (GBPUSD=X) on Thursday morning, trading at $1.342 at the time of writing, despite concerns over the rising levels of government debt and borrowing.
Data released by the Office for National Statistics (ONS) on Thursday morning showed that UK government borrowing came in at £20.2bn in April, which was up £1bn from the same month last year.
This was also higher than the consensus forecast of £17.9bn, according to Capital Economics.
Public sector net debt, excluding public sector banks, was estimated to be 95.5% of the UK's gross domestic product (GDP) at the end of April and remained at the highest level since the early 1960s.
