U.S. coastal cash crude grades weakened on Monday, dealers said, as recovering global crude output and continued drawdowns from the U.S. Strategic Petroleum Reserve increased oil supplies.

The United Arab Emirates raised its crude output to near record highs above 3.8 million barrels per day in June after it quit OPEC to escape production caps, two sources familiar with production data said on Monday.

This comes after the Organization of the Petroleum Exporting Countries (OPEC) and its allies including Russia agreed on Sunday to further increase output targets by 188,000 bpd from August, on top of similar increases for June and July.

The jump in UAE and OPEC output adds to signs that Gulf oil flows through the Strait of Hormuz have recovered following disruption caused by the Iran war, with stranded cargoes gradually clearing the Strait of Hormuz and exporters restoring production.

Meanwhile, 6.2 million barrels of crude oil were drawn down from the U.S. Strategic Petroleum Reserve in the week ending July 3, bringing its inventory to 319.5 million barrels, the lowest level since April 1983, according to data from the Department of Energy. Continued releases from the reserves boost sour crude availability, pressuring Gulf Coast grades such as Mars and Southern Green Canyon (SGC).

The WTI/Brent spread widened to a discount of $3.40, but traded narrower than the minus $4 discount preferred by foreign buyers to snap up U.S. crude.

In refining news, Marathon Petroleum has restored power at its 146,000 barrel per day refinery in Detroit, Michigan, it said on Monday, adding that intermittent flaring may be possible during the startup of process units. A power outage affected operating conditions at the Detroit refinery on July 5.

U.S. oil refiners are expected to have about 264,000 barrels per day (bpd) of capacity offline for the week ending July 10, increasing available refining capacity by 153,000 bpd, research company IIR Energy said on Monday. Offline capacity is expected to decrease to 252,000 bpd in the week ending July.17.

  • Light Louisiana Sweet for August delivery eased 20 cents to a midpoint of a 50-cent discount and was seen bid and offered between ​discount of $1.00 and parity to U.S. crude futures NYMEX:CL1!

  • Mars Sour eased 50 cents to a midpoint of a $5.50 discount and was seen bid and offered between a $5.70 and $5.30 a barrel discount to U.S. crude futures NYMEX:CL1! ​

  • WTI Midland was unchanged at a midpoint of a 20-cent discount and was seen bid and offered between ​ discount of 40 cents and parity to U.S. crude futures NYMEX:CL1!

  • West Texas Sour eased 45 cents to a midpoint of a $1.95 discount and was seen bid and offered between a $2.15 and $1.75 a barrel discount to U.S. crude futures NYMEX:CL1!

  • WTI at East Houston, also known as MEH, traded between a 5-cent and 15-cent a barrel premium to U.S. crude futures NYMEX:CL1!

  • ICE Brent September futures ICEEUR:BRN1! fell 13 cents to settle at $71.99 a barrel on Monday​.

  • WTI August crude NYMEX:CL1! futures fell 14 cents to settle at $68.55 a barrel on Monday​.

  • The Brent/WTI spread widened 25 cents to last trade at minus $3.40, after hitting a high of minus $3.21 and a low of minus $3.52.