Oil prices retreated on Tuesday, erasing gains from the previous sessions, as investors exercised caution ahead of the crucial OPEC+ meeting scheduled for this Sunday.
In a volatile turn of events, oil prices retreated on Tuesday, erasing gains from the previous sessions, as investors exercised caution ahead of the crucial OPEC+ meeting scheduled for this Sunday.
The Organization of the Petroleum Exporting Countries (OPEC) and its allies, collectively known as OPEC+, are expected to deliberate on the possibility of implementing deeper supply cuts in response to the deceleration of global economic growth.
After a surge of approximately 2% on Monday, prompted by reports from three OPEC+ sources hinting at potential additional oil supply cuts, Brent crude futures dipped by 1% to $81.52 a barrel, while US West Texas Intermediate crude futures followed suit, dropping 1% to $77.03.
The upcoming OPEC+ meeting has sparked intense speculation among investors, with Tamas Varga of oil broker PVM emphasizing its pivotal nature. Analysts are keenly watching for concrete actions to substantiate the hints and rumors circulating the market.
Singapore-based OANDA analyst Kelvin Wong noted that short-term speculators took profits on West Texas Intermediate after technical charts indicated overbought conditions. The market’s focus remains on whether the OPEC+ energy ministers will translate hints into actionable decisions.
Eight analysts have predicted that OPEC+ is likely to extend or potentially deepen oil supply cuts into the coming year. RBC Capital analyst Helima Croft suggested the possibility of a deeper reduction, with Saudi Arabia potentially seeking additional contributions from other members to share the burden of the adjustment.
Oil prices have witnessed a 16% decline since late September, influenced by record-high crude output in the United States, the world’s leading producer. Concerns about demand growth and economic slowdown have added to the market’s uncertainty.
As the world awaits the outcome of the OPEC+ meeting, this week’s reports on US inventories are expected to show an increase in both crude and gasoline stockpiles, according to a Reuters poll. The initial report from the American Petroleum Institute, scheduled for release later on Tuesday, will provide further insights into the current state of the oil market.