Oil Drops to $83 a Barrel Ahead of OPEC Plus Meeting, U.S Oil Inventories Report

Oil dropped further on Tuesday amid uncertainties surrounding OPEC+’s Thursday meeting and the U.S weekly oil inventories report expected to show an increase in crude inventories.

Brent crude oil, against which Nigerian oil is priced, fell to $83.72 a barrel as at 4:00 PM Nigerian time. While the U.S West Texas Intermediate oil dipped to $82.16 per barrel.

“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.”

Experts, in a Reuters poll, had said U.S crude oil inventories likely increased by 1.6 million barrels last week, American Petroleum Institute will release the first of this week’s two supply reports later today.

The price of Brent crude oil has risen by over 60 percent in 2021, hitting a three-year high of $86.70 last week as demand recovers and the Organization of the Petroleum Exporting Countries and allies led by Russia, or OPEC+ eases record output cuts slowly.

“Demand for crude oil is expected to rise as winter months approach,” said Naeem Aslam of Avatrade. “On the other hand, supply is expected to remain the same.”

OPEC and allies known as OPEC plus that cut production by 9.7 million barrels per day in 2020, has refused to up production to match demand despite calls from the United States and other consumers to do so. OPEC+ has stuck to a gradual monthly production increase of 400,000 bpd.