Oil prices slipped slightly lower this Tuesday, as the Organization of Petroleum Exporting Countries geared up for their next meeting set up for this Wednesday in an attempt to review the rising oil production program amid the U.S. call to pump more.
Prices were also weighed down a little bit by the havoc Hurricane Ida wreaked on the U.S. Gulf Coast on Sunday. It landed in Louisiana, provoking severe floods, power outages, and stalled oil production, as we have reported previously.
On the other hand, oil prices also endured the manufacturing data from China; according to Reuters, factory activity in the Asian country, during August, grew at a slower pace than previous months, weighing in oil prices.
However, Brent crude is still trading at a price well above the $70 per barrel mark. According to Reuters, Brent crude futures for October, due to expire on Tuesday, fell 50 cents, or 0.7%, to $72.91 a barrel; while the U.S. West Texas Intermediate (WTI) crude futures were down 58 cents, or 0.8%, at $68.63.
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OPEC unlikely to change oil output agreement
Moreover, according to sources quoted by Reuters, despite the U.S, call to OPEC to pump more oil, in an attempt to drive down gasoline prices in the U.S., OPEC is unlikely to change its agreement to raise output monthly by 400,000 barrels.
OANDA analyst Craig Erlam told Reuters. “It would be a surprise if they do anything at the moment, despite pressure from the White House, given current price levels, demand, and the uncertain outlook.”
On the other hand, OPEC’s own data showed the market would face a deficit until the end of 2021 but then flip into a surplus in 2022. Consequently, it would be counterproductive to boost further oil production.
Finally, Hurricane Ida and the demand hit after flooded refineries and power outages would be the biggest factor for the U.S. As it has prompted a spike in gasoline prices, which have become a political liability for the Biden administration.
