Crude Oil Edges Lower; OPEC+ Meeting Looms Large

© Reuters.

By Peter Nurse

AiVIF.com -- Oil prices edged lower Tuesday, trading near its lowest level in around four months, as attention focused mainly on the week’s meeting of top producers to set future production levels.

By 9:15 AM ET (1315 GMT), U.S. crude futures traded 0.2% lower at $93.69 a barrel, after earlier falling to its lowest level since early April, while the Brent contract fell 0.1% to $99.91, dropping below $100 for the first time in over a week.

U.S. Gasoline RBOB Futures were down 0.1% at $2.9958 a gallon.

The crude market opened August on a negative note, continuing the weakness of the previous two months on concerns aggressive monetary policy tightening will result in a global recession, hitting demand for oil.

The market has largely stabilized Tuesday but could easily start to weaken again ahead of the latest monthly U.S. Job Openings and Labor Turnover Survey for June at 10 AM ET (1400 GMT), which should give insight into how quickly the job market may be cooling in the largest oil consumer in the world.

This comes ahead of Friday’s widely watched official employment report, which is expected to show an addition of 250,000 payrolls in July, a slowing from the 381,000 jobs created the month before.

“U.S. jobs data could be critical in determining the direction of oil in the future. In case of weak economic data, commodity prices may increase their decline,” said analysts at FxPro Financial Services. “A new upward momentum cannot be ruled out if the following jobs report surprises with its strength. However, the latter scenario looks less likely.”

Of particular interest this week will be Wednesday’s meeting of the Organization of Petroleum Exporting Countries and allies, a group known as OPEC+.

The group has unwound the record 9.7 million barrels per day supply cut they agreed on in April 2020, when the COVID-19 pandemic hit demand, and thus there is a degree of uncertainty over what they will decide to do.

A number of consuming countries, led by the U.S., have urged the group to increase production in order to reduce prices which are contributing to a cost of living crisis in many of these countries.

However, OPEC+ will be reluctant to increase supply into a volatile market, while many members will also find it difficult to do so, given they are already struggling to maintain their current quota levels.

“The global economic slowdown, in our view, is a more significant factor influencing the oil price than fears of supply cuts,” added FxPro.

Ahead of the OPEC+ meeting, the American Petroleum Institute is set to release its latest weekly reading of U.S. inventories later in the session.