Oil drops ahead of the OPEC+ meeting and the Fed minutes.
Oil drops ahead of the OPEC+ meeting and the Fed minutes.
Investing.com — Tuesday saw a drop in oil prices as investors exercised prudence ahead of this weekend's much-anticipated summit of major producers.
The U.S. crude futures contract fell 1% to $77.04 a barrel by 09:45 ET (13:45 GMT), while the Brent price fell 1% to $81.54 a barrel.
Following a 4% spike on Friday, the benchmarks for crude oil saw another 2% increase on Monday. This was due to a report by Reuters that the Organization of the Petroleum Exporting Countries (OPEC+) and their allies will be debating whether to reduce oil supply further in an effort to support prices during their meeting on November 26.
OPEC+ summit is imminent.
In a series of actions that began in late 2022, Saudi Arabia, Russia, and other OPEC+ members have already committed to cutting oil supply by roughly 5 million barrels per day, or roughly 5% of daily global consumption.
This amount comprises a one million barrel per day voluntary decrease by Saudi Arabia and a 300,000 barrel per day reduction in Russian oil exports, both of which are set to expire at the end of 2023.
According to ING analysts, "growing expectations that we will see some action taken by OPEC+ at their upcoming meeting this weekend are providing support." "Speculators who have significant short positions heading into this weekend should avoid doing so. Expectations suggest that Saudi Arabia will have to extend their extra voluntary cut until at least 2024.
However, according to Toril Bosoni, the head of the International Energy Agency's oil markets and industry division, even if OPEC+ continues the cuts into next year, there would still be a small supply surplus in the global oil market in 2024. This was stated earlier on Tuesday.
Awaiting the Fed minutes, rate pause bets pummeled the dollar
A significant support level for oil and other commodities priced in US dollars was the US Dollar Index's weakness, which has already fallen to a 2-½ month low.
The dollar fell as traders hedged their expectations that the Fed will stop hiking interest rates and perhaps even start lowering them as early as March 2024.
More details on this idea should be revealed in the minutes of the Fed's late-October meeting, which are expected later on Tuesday.
US stockpiles are also expected
Despite the recent increases, oil has lost almost 16% since late September, with four weeks in a row of losses due to worries about declining demand and record-high crude output in the United States, the world's largest producer.
According to data released last week, U.S. oil stocks increased more than anticipated. The most recent reports on U.S. inventory are expected to show that crude and stockpiles increased again the following week.
The official figures from the Energy Information Administration are due on Wednesday, and later on Tuesday is the first report from the American Petroleum Institute for this week.
Source Investing.com
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