November 21, 2023

Oil fell on Tuesday, reversing steep gains made in the past two sessions, as investors turned cautious ahead of a meeting of OPEC+ this 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 told Reuters that the group, made up of the Organization of the Petroleum Exporting Countries (OPEC) and its allies, was set to consider whether to make additional oil supply cuts when it meets on Nov. 26.

Brent crude futures fell 80 cents, or 1%, to $81.52 a barrel by 1017 GMT, while U.S. West Texas Intermediate crude futures also dropped by 80 cents, 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 have predicted.

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 U.S., the world’s top producer, held at record highs, while the market was concerned about demand growth and economic slowdown.

The latest U.S. inventory reports are forecast to show crude and gasoline stockpiles rose last week, according to a Reuters poll on Monday. This week’s first report from the American Petroleum Institute is out later on Tuesday.

REUTERS