*

OPEC in pursuit of market share, says Onyx analyst

*

411,000 bpd increase likely, RBC Capital analyst says

*

U.S. crude inventories rise unexpectedly

(Updates at 12:31 p.m. EDT)

By Georgina McCartney

HOUSTON, May 22 (Reuters) - Oil prices slipped on

Thursday as investors weighed a report that OPEC+ is discussing

a production increase for July, stoking concerns that global

supply could outpace demand growth.

Brent futures fell 66 cents, or 1.02%, to $64.25

a barrel by 12:31 p.m. EDT. U.S. West Texas Intermediate crude

was down 51 cents, or 0.83%, at $61.06.

The Organization of the Petroleum Exporting Countries and

its allies, known collectively as OPEC+, are discussing whether

to make another large output increase at their meeting on June

1, Bloomberg News reported.

An increase of 411,000 barrels per day for July is among the

options under discussion, though no final agreement has been

reached, the report said, citing delegates.

"The OPEC+ speculation is the biggest factor today,"

said John Kilduff, partner at Again Capital in New York.

"This OPEC+ decision is going to be pretty weighty, and

it is not helping that Kazakhstan did not come through last

month," he added.

Kazakhstan's oil production has

risen

by 2% in May, an industry source said on Tuesday.

OUTPUT INCREASES

Reuters previously reported that the group planned to

accelerate output increases and could bring back as much as 2.2

million bpd by November. OPEC+ has been in the process of

unwinding production cuts, with additions to the market in May

and June.

"We're seeing the market reacting to evidence that OPEC is

letting go of a strategy to defend price in favour of market

share," said Harry Tchiliguirian at Onyx Capital Group. "It's a

bit like taking off a Band-Aid; you do it in one fell swoop."

RBC Capital analyst Helima Croft said in a note on Wednesday

that a 411,000-bpd increase from July is the "most likely

outcome" from the meeting, primarily from Saudi Arabia.

"A key question will be whether the voluntary cut will be

fully drawn down before the leaves turn brown in many parts of

the world, in line with the original taper schedule," she said.

Prices were already lower in the session after Energy

Information Administration data released on Wednesday showed

U.S. crude and fuel inventories showed surprise stock builds

last week as crude imports hit a six-week high and gasoline and

distillate demand slipped.

Crude inventories rose by 1.3 million barrels to 443.2

million barrels in the week ended May 16, the EIA said. Analysts

in a Reuters poll had expected a drawdown of 1.3 million

barrels.

The EIA's surprise stock builds will exert downward pressure

on prices, particularly on WTI, said Emril Jamil at LSEG Oil

Research, adding that this could further encourage more U.S.

exports to Europe and Asia.

Curbing losses on Thursday, U.S. oil company Chevron's ( CVX )

license to operate in Venezuela will expire on May 27,

U.S. Secretary of State Marco Rubio said in a post on his

personal X account late on Wednesday.

"This statement by Rubio could be a game changer. But these

deadlines have been extended in the past, so maybe the market is

just not convinced yet," said Phil Flynn, senior analyst with

Price Futures Group.