Oil dips in choppy trade before U.S. inventories and OPEC+ meeting

Oil fell further below $85 a barrel on Tuesday, but remained close to a three-year high in choppy trade ahead of weekly U.S. supply reports expected to show a rise in crude inventories and of Thursday’s OPEC+ meeting. Analysts in a Reuters poll expect weekly U.S. crude inventory data to show a rise of 1.6 million barrels . Industry group the American Petroleum Institute releases the first of this week’s two supply reports. Brent crude was down 43 cents, or 0.5%, at $84.28 a barrel, while U.S. West Texas Intermediate (WTI) crude fell 76 cents, or 0.9%, to $83.29.

“There’s a little bit of uncertainty about OPEC and that’s holding the market back,” said Phil Flynn, an analyst at Price Futures Group in Chicago. “But we are still in a strong uptrend.” Brent’s price has surged more than 60% in 2021, hitting a three-year high of $86.70 last week as global demand has recovered and the Organization of the Petroleum Exporting Countries and allies led by Russia, or OPEC+, have been slow to unwind record output cuts. Ahead of Thursday’s meeting, consuming countries have been pressuring OPEC+ to do more to cool the market. But the alliance is expected to stick to its plan for gradual, monthly production increases of 400,000 barrels per day.

Oil rose early in the session, supported by the slow ramp-up in OPEC supplies. On Monday, a Reuters survey found the increase in OPEC’s output in October undershot the planned rise due to involuntary outages in some producers. “The oil rally faces some headwinds this week,” said Jeffrey Halley of brokerage OANDA. “Oil looks very much like it is going to range-trade ahead of the OPEC+ meeting on Thursday although pre-meeting rumours will lead to some intraday volatility.” In a sign that high prices are encouraging more supply elsewhere, BP said on Tuesday it will ramp up investments in onshore U.S. shale oil and gas business to $1.5 billion in 2022 from $1 billion this year.