With hopes that OPEC + members will agree to a major reduction in crude production later in the day despite low market supplies, oil prices modestly declined on Wednesday after rising in recent days.
The international benchmark, Brent crude, dropped 23 cents, or 0.3%, to $91. 57 a barrel at 08:39 GMT, while US West Texas Intermediate crude dropped 32 cents, or 0.4%, to $86.20 per barrel. Both prices had seen a significant rise over the previous two days.
According to Fiona Cincotta, chief market analyst at City Index, the expectation that OPEC + will agree on the largest production cut since the low levels of the Covid-19 epidemic in 2020 is what has caused oil prices to rise thus far this week.
According to a source close to OPEC, the so-called OPEC+ grouping, which consists of Russia-led allies and OPEC members, will meet in Vienna later on Wednesday to discuss production cuts of up to 2 million barrels per day.
As President Joe Biden works to avert an increase in gas prices in the United States, the United States is reportedly asking OPEC + producers to avoid making significant cuts.
Because several OPEC+ nations already pump substantially less than their present limits, the actual impact of cutting output targets on supply will be minimal. OPEC+ fell short of its production goal by 3.58 million barrels per day in August.
However, ANZ Research analysts said in a note that the agreement on the deep cuts “would send a strong message that the group is determined to support the market,” adding that this “would lead to a significant shortage in the market. ”
US crude oil inventories fell by 1. 8 million barrels for the week ending September 30, according to market sources citing figures from the American Petroleum Institute on Tuesday.
Traders claimed that one of the factors pushing up crude prices was the strengthening dollar, which made buying oil with other currencies more expensive.
In anticipation of the “OPEC +” meeting, oil keeps much of its recent gains.
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