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Investing.com — Oil prices retreated Tuesday, handing back some recent gains amid caution ahead of the weekend’s eagerly-awaited meeting of a group of top producers.
By 09:45 ET (13.45 GMT), the futures traded 1% lower at $77.04 a barrel, while the contract dropped 1% to $81.54 a barrel.
The crude benchmarks gained around 2% on Monday, adding on to Friday’s 4% rise, after Reuters reported that the Organization of the Petroleum Exporting Countries and their allies, a group known as OPEC+, is set to consider whether to make additional oil supply cuts to shore up prices when it meets on Nov. 26.
OPEC+ meeting looms large
Saudi Arabia, Russia and other members of OPEC+ have already pledged oil output cuts of about 5 million barrels per day, or about 5% of daily global demand, in a series of steps that started in late 2022.
This figure includes a voluntary reduction by Saudi Arabia of one million barrels per day and a 300,000 barrels a day cut in Russian oil exports, both of which last until the end of 2023.
“Growing expectations that we will see some action taken by OPEC+ at their upcoming meeting this weekend are providing support,” said analysts at ING, in a note. “Speculators will not want to go into this weekend with sizeable short positions. Given expectations, we will likely have to see at least Saudi Arabia rolling over their additional voluntary cut into 2024.”
That said, even if OPEC+ extends the cuts into next year, the global oil market will still see a slight surplus of supply in 2024, said Toril Bosoni, the head of the International Energy Agency’s oil markets and industry division earlier Tuesday.
Fed minutes awaited, dollar battered by rate pause bets
Weakness in the — which has dropped to a 2-½ month low – was also a major support point for oil and other commodities priced in the greenback.
A drop in the dollar came as traders priced in bets that the was done raising interest rates, and could potentially begin cutting rates by as soon as March 2024.
The of the Fed’s late-October meeting, which are due later on Tuesday, are expected to shed more light on this notion.
U.S. inventories also due
Despite the recent gains, oil has dropped about 16% since late September, posting four straight weeks of losses, on concerns of worsening demand, and as crude output in the U.S., the world’s top producer, held at record highs.
Data released last week showed a bigger-than-expected increase in U.S. oil inventories, and the latest U.S. inventory reports are forecast to show crude and stockpiles rose again the following week.
This week’s first report from the is due later Tuesday, followed by the official numbers from the , on Wednesday.
(Ambar Warrick contributed to this item.)
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