Oil prices retreat as critical Opec+ meeting looms large

Oil fell on Tuesday, reversing the past two sessions’ steep gains, as investors turned cautious ahead of an Opec+ meeting on Sunday when the producer group may discuss deepening supply cuts due to slowing global growth.

Both contracts had climbed about 2% on Monday after three Opec+ sources said the group, which combines the Organisation of the Petroleum Exporting Countries and allies, was set to consider whether to make additional supply cuts when it meets on November 26.

Brent crude futures fell 80c, or 1%, to $81.52 a barrel by 10.17am GMT, while West Texas Intermediate (WTI) also dropped 80c, or 1%, to $77.03.

“No doubt that the upcoming meeting of Opec+ energy ministers will be one of the most pivotal of recent times as investors are searching for clues whether the hints and rumours will be backed up by action,” said Tamas Varga of oil broker PVM.

Short-term speculators took profit on WTI after several indicators were overbought on technical charts, Singapore-based Oanda analyst Kelvin Wong said.

Opec+ is likely to extend or even deepen oil supply cuts into next year, eight analysts predict.

RBC Capital analyst Helima Croft said: “We see some scope for the group to do a deeper reduction, but we would anticipate that Saudi Arabia would seek additional barrels from other members to share the burden of the adjustment.”

Oil has dropped about 16% since late September as crude output in the US, the world’s top producer, held at record highs, while the market was concerned about demand growth and economic slowdown.

The latest US inventory reports are forecast to show crude and petrol stockpiles rose last week, according to a Reuters survey on Monday. This week's first report from the American Petroleum Institute is due later on Tuesday.

Reuters