Oil falls 2% to four-month lows on oversupply concerns

By Shariq Khan

NEW YORK, Oct 2 (Reuters) - Oil prices settled down about 2% at the lowest in four months on Thursday, extending a run of declines into a fourth day, due to concerns about oversupply in the market ahead of a meeting of the OPEC+ group over the weekend.

Brent crude futures LCOc1 fell $1.24, or 1.9%, to settle at $64.11 a barrel, the lowest since June 2. U.S. West Texas Intermediate crude CLc1 dropped $1.30, or 2.1%, to settle at $60.48 a barrel, the lowest since May 30.

OPEC+ could agree to raise oil production by up to 500,000 barrels per day in November, triple the increase for October, as Saudi Arabia seeks to reclaim market share, three sources familiar with the talks said.

"We believe September marked a turning point, with the oil market now heading towards a sizeable surplus in 4Q25 and into next year," JPMorgan analysts wrote on Thursday.

Potentially higher OPEC+ supply, slowing global refinery crude runs due to maintenance and a seasonal dip in demand in the months ahead are set to accelerate oil stock builds, the JPMorgan analysts said.

"The writing is on the wall," investment research firm HFI Research wrote in a blog post. "US oil inventories will build into year-end, and more global visible inventory builds will take place. Couple that with higher OPEC+ crude exports, and the end result is a persistently weaker oil market environment," they wrote.

The Energy Information Administration said on Wednesday that U.S. crude oil, gasoline and distillate inventories rose last week as refining activity and demand softened.

Oversupply concerns have been compounded by signs of weak demand, PVM Energy analysts wrote. "Oil demand forecasts diverge considerably, but on average, they show this year's figure revised down by 150,000 bpd between January and September," they said.

The Group of Seven nations' finance ministers said on Wednesday they will take steps to increase pressure on Russia by targeting those who are continuing to boost purchases of Russian oil.

Limiting oil's losses, the U.S. will provide Ukraine with intelligence for long-range missile strikes on Russian energy infrastructure, two officials told Reuters on Wednesday, confirming an earlier Wall Street Journal report.

This will make it easier for Ukraine to hit refineries, pipelines and other infrastructure with the aim of depriving the Kremlin of revenue and oil, the WSJ said.

"There is some concern in the market again that Russian oil could get disrupted," said Giovanni Staunovo, commodity analyst at UBS. But as long as there are no disruptions yet, the impact on prices will likely be minor, he added.

Stockpiling demand from China, the world's largest crude oil importer, also limited the downside to oil prices, traders said.

Meanwhile, the largest U.S. fuel conduit, the Colonial Pipeline, restarted after a brief outage on Thursday due to unplanned system maintenance, a company spokesperson said.