Crude Oil Lower; Next Week's OPEC Meeting Eyed

© Reuters.

By Peter Nurse

AiVIF.com -- Crude oil prices edged lower Thursday, as traders contemplated the possibility of additional supply being announced at next week’s meeting of top producers.

By 9:25 AM ET (1325 GMT), U.S. crude was down 0.5% at $72.72 a barrel, after climbing late Wednesday as high as $74.25 per barrel, a peak not seen since Oct. 18, while Brent was down 0.4% at $74.86, just off Wednesday’s $76 high, also a 2018 peak. 

U.S. Gasoline RBOB Futures slipped 0.7%, to $2.2515 a gallon.

Weighing on the markets Thursday have been comments suggesting that the Organization of Petroleum Exporting Countries and allies, a group known as OPEC+, is considering increasing supply at its meeting next week to curb the rapid rise in crude prices.

Saudi Energy Minister, Prince Abdulaziz bin Salman, the de facto leader of the group, was reported Thursday saying that “we have a role in taming and containing inflation, by making sure that this market doesn’t get out of hand.”

This follows reports out of Russia earlier this week suggesting it, one of the most influential members of the group, was considering proposing an increase in oil output at next week’s meeting.

Oil markets have soared this year, with both benchmarks more than 40% higher year-to-date, on hopes of a quick return to peak demand as Covid-19 passes as well as OPEC+’s cautious husbandry of global supply.

Evidence of the increased demand in the U.S., the globe’s largest consumer, came from the Energy Information Administration reporting a drop in U.S. stockpiles of 7.6 million barrels for the week ended June 18, the fifth consecutive week that stocks have fallen, the longest run since January 2021.

This group is scheduled to meet toward the end of next week to discuss production quotas for August, and possibly beyond. OPEC+ has been steadily increasing output as the global economy recovers from the ravages caused by the Covid-19 pandemic, but is still withholding more than 5 million barrels a day of production from the market.

Earlier Thursday, in annual talks with OPEC+, India’s oil minister called for “affordable” energy, warning about the impact of rising oil prices on consumers.

India is the third largest consuming country in the world, and these comments will add pressure on the producers ahead of the meeting.