Oil falls ahead of OPEC+ supply policy meeting


Oil fell on Monday ahead of a meeting by OPEC and its allies which may determine whether a recent rally in prices amid supply shocks and a recovery from the COVID-19 pandemic will be sustained.

Brent crude was down 14 cents or 0.2% at $79.14 per barrel by 0505 GMT. It rose 1.5% last week, its fourth weekly gain in a row. U.S. oil dropped by 15 cents or 0.2% to $75.73, after gaining for the past six weeks.

Oil prices have risen due to the supply disruptions and a rise in global demand, pushing Brent last week above $80 to a near three-year high.

Risk appetite has been “boosted by growing confidence in a strong pick up in global growth,” ANZ Research said in a note, but added that investors were now focused on the OPEC+ meeting due later on Monday.

OPEC+ agreed in July to boost output by 400,000 barrels per day (bpd) every month until at least April 2022 to phase out 5.8 million bpd of existing cuts. Four OPEC+ sources told Reuters recently that producers were considering adding more than that deal envisaged. read more

The earliest any increase would take place would be November since the previous OPEC+ meeting decided October volumes.

The oil price rally has also been fuelled by an even bigger increase in gas prices that have spiked 300% and are trading around $200 per barrel in comparable terms, prompting switching to fuel oil and other crude products to generate electricity and for other industrial needs.

“The uneven nature of the post-pandemic recovery will keep demand-side uncertainties in play, giving rise to oil price volatility,” Fitch Solutions said in a note.

Reporting by Aaron Sheldrick; Editing by Himani Sarkar and Richard Pullin

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