Oil Prices Fall Ahead of OPEC+ Meeting

Crude oil prices started trade with a dip today, following the U.S. Energy Information Administration’s weekly report, which showed a sizable build in gasoline stocks.

At the time of writing, Brent crude was trading at $72.61 per barrel, with West Texas Intermediate at $68.53 per barrel, both down from opening.

Oil traders are also waiting for the Sunday meeting of OPEC+ where the group is expected to announce yet another extension of its production cuts. That announcement is probably already factored into prices, so they are unlikely to change much after that meeting.

“The only question is whether it’s a one-month pushback, or three-month, or even longer. That would give the oil market some direction. On the other hand, we would be worried about a dip in oil prices if the deferments don’t come,” Singapore-based DBS Bank analyst Suvro Sarkar told Reuters.

“Crude may have already baked in a small deferral in OPEC+ tapering” Vandana Hari from Vanda Insights told Bloomberg. “A decision to proceed with the boost from Jan. 1 or something as drastic as an indefinite postponement” would surprise traders, she said.

ING’s commodity analysts Warren Patterson and Ewa Manthey noted oil demand concerns in a recent update. “Crude oil prices continue to face stiff resistance around US$75/bbl due to demand concerns. Any premature production hike from the group could push the market into deeper oversupply,” they wrote on Wednesday.

OPEC+ had earlier this year announced plans to start gradually bringing back supply towards the end of the year if the price was right. Since the price has not been right for months, the group has been postponing its supply return. Some have suggested the production caps may have to become long-term because of the market’s refusal or failure to respond to the supply curbs with higher prices.