Oil prices slip slightly before Opec+ talks on supply cuts

Singapore — Oil prices moderated very slightly on Wednesday after gaining more than 3% in the previous session ahead of a meeting of Opec+ producers to discuss a big cut in crude output.

Traders said a stronger dollar was the main reason for the slightly easier prices, as it reduced demand from buyers using other currencies.

Brent crude fell 22c, or 0.2%, to $91.58 a barrel at 4.27am GMT, after climbing $2.94 in the previous session.

US West Texas Intermediate (WTI) crude futures fell 29c, or 0.3%, to $86.23 a barrel after gaining $2.89 in the previous session.

Opec+ will be meeting in Vienna later on Wednesday, to discuss output cuts of up to 2-million barrels per day (bpd), an OPEC source told Reuters.

A cut of that magnitude would be the biggest made by Opec+ since demand was hit by Covid-19 in 2020.

“I will not be surprised if “buy the rumour, sell the fact” could happen since the strong rally in the crude prices may have priced in such a production cut,” Tina Teng, an analyst at CMC Markets, said.

The US is pushing Opec+ producers to avoid making deep cuts, a source familiar with the matter told Reuters, as President Joe Biden looks to prevent a rise in US petrol prices.

The real effect on supply from a lower output target would be limited as several Opec+ countries are already pumping well below their existing quotas. In August, Opec+ missed its production target by 3.58-million bpd.

However an agreement on big cuts “would send a strong message that the group is determined to support the market,” ANZ Research analysts said in a note, adding that it “would significantly tighten the market.”

US crude oil stocks fell by about 1.8-million barrels for the week ended September 30, according to market sources citing American Petroleum Institute figures on Tuesday. 

Reuters