Oil prices little changed ahead of OPEC+ talks on supply cut

SINGAPORE, Oct 5 (Reuters) – Oil prices were little changed on Wednesday ahead of a meeting of OPEC+ producers to discuss a big cut in crude output after gaining more than 3% in the previous session.

Brent crude was up 1 cent at USD 91.81 a barrel at 0628 GMT, after climbing USD 2.94 in the previous session.

US West Texas Intermediate (WTI) crude futures fell 9 cents, or 0.1%, to USD 86.43 a barrel after gaining USD 2.89 a day earlier.

The Organization of the Petroleum Exporting Countries (OPEC) and allies led by Russia, together called OPEC+, will meet 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 by OPEC+ since those made after the COVID-19 pandemic slashed demand in 2020.

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

Stephen Innes, managing partner at SPI Asset Management, said there “is a degree of profit taking and risk reduction ahead of the OPEC gathering”.

The United States 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 gasoline prices.

The real impact 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 Sept. 30, according to market sources citing American Petroleum Institute figures on Tuesday.

Capping gains for the day was the stronger dollar which makes oil more expensive for buyers holding other currencies, reducing demand. 

(Reporting by Sonali Paul in Melbourne and Isabel Kua in Singapore; editing by Simon Cameron-Moore and Jason Neely)