LONDON—Oil inched lower on Wednesday after gains in recent days ahead of the OPEC+ producers’ meeting later in the day.
Brent crude was down 23 cents, or 0.3 percent, at $91.57 a barrel at 0839 GMT while U.S. West Texas Intermediate (WTI) crude fell 32 cents, or 0.4 percent, to $86.20 a barrel. Both contracts rose sharply in the last two days.
Oil has risen so far this week in anticipation of the largest output cut by OPEC+ since the depths of the COVID-19 pandemic in 2020, said Fiona Cincotta, senior financial markets analyst at City Index.
“In reality, the real impact of a large cut would be smaller, given that some of the members are failing to reach their output quotas,” Cincotta added.
“OPEC+ has a fine balance to walk in the scale of output cuts likely to be announced today. Close the taps too much and prices will soar at the cost of demand destruction. Cut too little and the sell-off will hamper OPEC+ revenue,” said Ehsan Khoman, MUFG’s head of emerging markets research.
The real impact on supply from a lower output target would be limited as several OPEC+ countries are already pumping well below their existing quotas. In August, OPEC+ missed its production target by 3.58 million bpd.
However an agreement on big cuts “would send a strong message that the group is determined to support the market,” ANZ Research analysts said in a note, adding that it “would significantly tighten the market.”
A rise in the U.S. dollar has also put pressure on crude prices as it makes oil more expensive for buyers holding other currencies.
