Oil falls a third straight day as supply worries mount

US crude fell 12 cents, 0.2%, to $71.53 a barrel, and is on track for a decline of about 4% this week

Oil prices fell a third day on Friday as supply concerns continued to haunt the market, with OPEC likely to add more barrels amid expectations that demand is returning as more countries recover from the pandemic.

Brent crude was down 20 cents, or 0.3 per cent, at $73.27 a barrel by 0548 GMT and is heading for a 3 per cent decline this week after two days of heavy declines.

US crude fell 12 cents, 0.2 per cent, to $71.53 a barrel, and is on track for a decline of about 4 per cent this week.

Discussions on supply policy within the Organization of the Petroleum Exporting Countries, Russia and other producers, a group called OPEC+, ended without agreement this month after the United Arab Emirates (UAE) objected to extending the output policy beyond April 2022.

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Saudi Arabia and the UAE are now close to finalising an agreement that would allow more supply into the market.

OPEC said on Thursday it expects world oil demand to increase next year to around levels seen before the pandemic, about 100 million barrels per day (bpd), led by demand growth in the US, China and India.

OPEC output in June increased by 590,000 bpd to 26.03 million bpd, the report showed.

"Output should rise further in July on the back of larger quotas, and we expect high prices to incentivise more production from the group even without a formal agreement to do so," Capital Economics said in a note.

A large decline in crude stockpiles in the United States has done little to support prices as a rise in inventories in a week that included the Fourth of July holiday, when driving usually surges, raised fresh demand concerns.