Oil prices were flat ahead of the OPEC+ producers’ meeting on Wednesday, stabilizing after a 1% drop in early trade on fears that a slowdown in global growth will affect fuel demand.
Brent crude futures were last down 3 cents, or 0.03%, to trade at $100.51 a barrel at 0603 GMT. West Texas Intermediate (WTI) crude futures held steady at $94.42 per barrel.
The Organization of the Petroleum Exporting Countries and its allies, including Russia, are meeting on Wednesday. OPEC+ sources said last week that the group will likely not change the production, or increase it slightly in September.
Analysts are not expecting any changes due to the weak demand outlook as recession fears increase. The group’s leading producer, Saudi Arabia, may be reluctant to increase production due to its OPEC+ partner Russia, which has been impacted by sanctions over the Ukraine conflict.
The main event for oil this week remains the OPEC+ decision, which will keep prices under pressure until OPEC and its partners decide on production volume for September.
All OPEC+ members are not even close to meeting their production targets in reality, so even a small production increase promise for September will continue to support the stability of oil prices.
Ahead of the meeting, OPEC+ cut its forecast for oil market surplus this year by 200,000 barrels per day (bpd) to 800,000 barrels a day, the three delegates said in a statement.
Several factors are weighing on the demand outlook, including growing fears of economic collapse in the United States and Europe, debt crunch in emerging market economies, and COVID-zero policy activity in China, the world’s largest oil importer.
As global demand concerns continue to mount, downside risks appear to increase in the $100-per-barrel oil price projections for Q4 2022.
Data from the American Petroleum Institute (API), an industry group, showed US crude inventories increased by about 2.2 million barrels in the week ended July 29, against analysts’ expectations of a decline of about 600,000 barrels, in addition to the outlook for a decline in demand.
Gasoline stocks fell by 200,000 barrels, less than analysts expected, but distillate stocks fell by about 350,000 barrels against analysts’ estimates.
The market will see if official data from the U.S. Energy Information Administration (EIA) at 1430 GMT confirms the inventory view.
