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Oil prices dip ahead of OPEC+ meeting

August 3, 2022By Reuters

LONDON, Aug 3 (Reuters) – Oil prices dipped on Wednesday ahead of a meeting of OPEC+ producers at which producers are expected to keep output steady with spare capacity limited and against the backdrop of fears that a slowdown in global growth will hit fuel demand.

Brent crude futures were down USD 1.34, or 1.3%, at USD 99.20 a barrel at 0815 GMT. West Texas Intermediate (WTI) crude futures fell USD 1.28, or 1.4%, to USD 93.14 a barrel.

The premium for front-month Brent futures over barrels loading in six months’ time is at a three-month low, indicating worries about current tight supply are abating.

Ministers for members of the Organization of the Petroleum Exporting Countries and allies including Russia, together known as OPEC+, meet on Wednesday from 1130 GMT.

OPEC+ sources told Reuters last week that the group would likely keep output unchanged in September, or raise it slightly.

Saudi Arabia may be reluctant to beef up output at the expense of OPEC+ partner Russia, hit by sanctions due to the Ukraine conflict.

“Even if the OPEC+ group did declare a small increase, the gesture would be largely symbolic given that very few members have the capacity to materially increase production,” said PVM analyst Stephen Brennock.

“Either way, OPEC will be wary of rocking the boat given the current volatile and turbulent state of the oil market.”

Ahead of the meeting, OPEC+ trimmed its forecast for an oil market surplus this year by 200,000 barrels per day (bpd), to 800,000 bpd, three delegates told Reuters.

Meanwhile, data from the American Petroleum Institute, an industry group, showed US crude stocks rose by about 2.2 million barrels for the week ended July 29.Gasoline inventories fell by 200,000 barrels and distillate stocks by about 350,000 barrels.

Official data from the US Energy Information Administration (EIA) is due at 1430 GMT.

(Additional reporting by Sonali Paul and Emily Chow; Editing by Louise Heavens)

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