Oil prices fall ahead of OPEC+ meeting as Saudis set to make up for lost Russian supplies

Oil prices fell ahead of an OPEC+ meeting on Thursday after a report emerged that Saudi Arabia was poised to pump more oil to offset any production losses in Russia.

price action
  • West Texas Intermediate crude for July delivery CL.1,

    fell $2.20, or 1.9%, to $113.07 a barrel. Oil on the Nymex ended 0.4% lower at $114.67 a barrel on Wednesday.

  • July Brent Crude Oil BRNN22
    ICE Futures Europe fell $1.9, or 2.2%, to $114.12 a barrel. Brent closed 1% higher at $122.84 a barrel on Wednesday.

  • June gasoline RBM22
    fell 1% to $4.02 a gallon while heating oil in June HOM22
    fell 1.8% to $4.027 a gallon.

  • July natural gas fell NGN22,
    was up 0.3% to $8.730 per million British thermal units after falling 6.7% on Wednesday.

market leader

Oil prices slipped after the The Financial Times reports that Saudi Arabia has told Western allies that it will increase production if global supply turns out to be facing a major drop in Russian production due to sanctions over its invasion of Ukraine. Citing five people familiar with the matter, the report said these concerns have increased since the EU recently imposed a ban on Russian oil by sea.

The sources said Saudi Arabia sees a tight market but no major shortages for now, although a ramp-up in China’s economy as it recovers from the recent COVID outbreak could put further pressure on supplies. The easing of lockdowns in China’s biggest cities has buoyed oil prices lately.

Saudi Arabia has repeatedly defied US calls to increase supply and ease pressure on soaring gas prices.

Fresh speculation over Saudi Arabia’s oil supply thoughts is surging as traders prepare for a meeting of the Organization of Petroleum Exporting Countries and its allies, known as OPEC+, on Thursday. Earlier this week, the oil price came as the Wall Street Journal reported that the group was considering exempting Russia from its production targets.

Separately, the Associated Press reported that President Joe Biden did is considering a face-to-face meeting with de facto Saudi ruler Prince Mohammed bin Salman. Biden condemned the Saudi royal family in 2019 after the 2018 killing and dismemberment of US-based journalist Jamal Khashoggi.

Read: Will OPEC+ fill the gap as Russian oil production falls? Don’t count on it.

Investors will also be keeping an eye on the Energy Information Administration’s US supply data, which is scheduled for release at 11:00 a.m. Eastern time. The report was delayed by one day due to the Memorial Day holiday on Monday.

Analysts and traders polled by the Wall Street Journal estimate that US oil inventories fell by 500,000 barrels in the week ended May 27th. Gasoline inventories are expected to fall 100,000 barrels from the previous week, while distillate inventories are expected to rise 800,000 barrels.

The American Petroleum Institute, an industry group, said late Wednesday that its weekly data showed crude inventories fell by 1.2 million barrels, gasoline inventories fell by 256,000 barrels and distillate inventories rose by 858,000 barrels, according to a source.

https://www.marketwatch.com/story/oil-prices-drop-ahead-of-opec-meeting-on-report-saudis-will-make-up-for-any-lost-russian-crude-11654151987?rss=1&siteid=rss Oil prices fall ahead of OPEC+ meeting as Saudis set to make up for lost Russian supplies

Brian Lowry

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