Oil prices fall as US inventories rise and OPEC+ supply is expected to increase.

(Reuters)- Oil prices fell about 1%, hitting a two-week low on Thursday, due to a surprising increase in US oil inventories last week and expectations that OPEC+ producers will raise production targets at a meeting this weekend.

Brent crude oil futures closed down 1% at $66,95 a barrel, while US West Texas Intermediate (WTI) crude fell 0,8%, closing at $63,48.

This was the lowest closing price for Brent crude since August 20th.

The U.S. Energy Information Administration (EIA) said that energy companies added 2,4 million barrels of oil to their inventories during the week ending August 29, as refineries entered the maintenance season. [EIA/S] [API/S]

This was a surprising increase in oil inventories compared to the 2 million barrel withdrawal that analysts predicted in a Reuters poll, and it was larger than the 0,6 million barrel increase that market sources said the American Petroleum Institute (API) trade group cited in its figures on Wednesday.

"This is a somewhat bearish report given the rise in oil prices," said John Kilduff, partner at Again Capital.

The IEA and API released the inventory data a day later than usual due to the Labor Day holiday in the US on Monday.

Eight members of the Organization of the Petroleum Exporting Countries and allies such as Russia in OPEC+ will consider further production increases in October at a meeting on Sunday, two sources familiar with the discussions told Reuters.

A potential increase in OPEC+ production would send a strong signal that regaining market share takes priority over price support, said Tamas Varga, senior analyst at brokerage and consulting firm PVM Oil Associates.

OPEC+ has already agreed to increase production targets by approximately 2,2 million barrels per day from April to September, in addition to a 300.000 barrel per day increase in the United Arab Emirates' quota.