TOKYO, Oct. 4 (Reuters) – Oil fell Monday ahead of a meeting between OPEC and its allies that could determine whether a recent price rally will continue amid supply shocks and a recovery from the COVID-19 pandemic.
Brent crude fell 14 cents, or 0.2%, to $ 79.14 a barrel by 0505 GMT. It was up 1.5% last week, its fourth straight weekly increase. US oil fell 15 cents, or 0.2%, to $ 75.73 after rising over the past six weeks.
Oil prices have risen due to supply disruptions and a surge in global demand, pushing Brent above $ 80 to near a three-year high last week.
Risk appetite was “heightened by growing confidence in a strong recovery in global growth,” ANZ Research said in a release, but added that investors were now focused on the OPEC + meeting due later on Monday.
OPEC +, which includes the Organization of the Petroleum Exporting Countries (OPEC) and allies including Russia, is under pressure from some countries to produce more to help at lower prices as demand in certain parts of the world rises faster than expected has recovered.
OPEC + agreed in July to increase production by 400,000 barrels per day (bpd) a month through at least April 2022 in order to phase out 5.8 million bpd of the existing cuts. Four OPEC + sources recently told Reuters that producers are considering adding more than the proposed deal. Continue reading
An increase would take place in November at the earliest, as the previous OPEC + meeting decided on the October volumes.
The oil price rally has also been fueled by an even bigger surge in gas prices, which are up 300% and trading around $ 200 a barrel on like-for-like terms, leading to a switch to heating oil and other raw materials for power generation and other industrial uses led.
“The uneven nature of the post-pandemic recovery will keep demand side uncertainties in play and lead to volatility in oil prices,” Fitch Solutions said in a press release.
Reporting by Aaron Sheldrick; Editing by Himani Sarkar and Richard Pullin
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