Oil prices steady as Opec prepares to meet

London — Oil prices were broadly stable as the market looks towards a meeting of Opec and its allies as well as a Federal Reserve rate decision and US government data on crude and fuel stockpiles on Wednesday.

Brent crude futures dipped 11c to $85.35 a barrel at 9.49am GMT, while West Texas Intermediate rose 8c to $78.95 a barrel.

Tamer US rate hike expectations helped lower the dollar index, which supported oil prices as a weaker greenback makes the commodity cheaper for buyers holding other currencies, according to Stephen Brennock, analyst at PVM.

The Federal Reserve is expected to deliver its decision at 7pm GMT.

All eyes will be on a meeting of key ministers of Opec and allies including Russia, collectively known as Opec+, where producers are expected to stick with output targets agreed in November.

Opec’s output fell in January, as Iraqi exports dropped and Nigeria’s production didn’t recover, with the 10 Opec members pumping 920,000 barrels a day below their targeted volumes under the Opec+ agreement, according to a Reuters survey.

The shortfall was bigger than the deficit of 780,000 bbl/day in December.

Separately, data from the American Petroleum Institute industry group shows US crude stocks rose about 6.3-million barrels, more than expected, in the week ended January 27, according to market sources.

Government stockpile data is due at 3.30pm GMT.

“Commercial storage in North America is ample,” said Norbert Ruecker, economist at the bank Julius Baer. “The improved market mood has lifted prices of late, but this support should remain temporary. We see lower prices in the longer term, in line with the futures market’s expectations.”

WTI is trading in contango, which means front-month delivery contracts are trading higher than later deliveries, indicating current oversupply.

Brent is in a shallow backwardation, the opposite market structure. 

Reuters