Oil has set its position after closing at its lowest level in more than five months as traders wait for an OPEC+ meeting and physical markets have generally eased up in recent weeks.
West Texas Intermediate traded near $94 a barrel after shedding almost 5% on Monday due to a global slowdown in energy demand.
On Tuesday, August 2, a meeting of the OPEC technical committee will be held, where industry experts will present their assessments of supply and demand in the market. The ministerial meeting will take place on Wednesday 3 August. The focus will be on the position of Saudi Arabia. After the visit of US President Joe Biden to the country, there are chances that the kingdom will announce plans to use its spare production capacity. If this happens, then oil prices may react negatively to the news and go below $100.
Traders were watching tensions rise between the US and China, sparked by House Speaker Nancy Pelosi’s expected visit to Taiwan.
Crude oil entered trading in August weakly after falling over the previous two months on fears that a global slowdown in growth will affect energy demand. The fall wiped out almost all the gains made since the start of the military conflict between Russia and Ukraine, even though Washington and the European Union have imposed many sanctions on Russian energy exports.
The spread of Brent oil – the difference between the two nearest contracts – narrowed significantly this month after economic concerns intensified, OPEC producer Libya resumed deliveries and there were signs of lower demand for gasoline in the United States. The difference was $2.02 a barrel on Tuesday compared to almost $4 a month ago.
The OPEC+ meeting came after President Joe Biden urged Saudi Arabia to increase production during a visit to the kingdom last month. The alliance has already agreed to return all supplies it cut off after the pandemic outbreak, although some members have not been able to fully meet quotas.
Investors also weighed in on the earnings of the largest BP Plc, which increased its dividend and stepped up share buybacks after earnings rose to their highest level since 2008.
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