DUBAI/LONDON- OPEC+ is likely to keep its oil output policy unchanged when the group meets on Wednesday and continue with its planned modest production increase, three OPEC+ sources told Reuters.
The Organization of the Petroleum Exporting Countries (OPEC) and allies including Russia, collectively known as OPEC+, will meet on Sept. 1 to discuss the previously agreed increase of 400,000 barrels per day (bpd) for the next several months.
US President Joe Biden’s administration has urged OPEC and its allies to boost oil output to tackle rising gasoline prices that it views as a threat to the global economic recovery.
US West Texas Intermediate (WTI) crude futures were down 41 cents, or 0.6 percent, to $68.80 a barrel, reversing most of Monday’s gains, in anticipation of disruptions to oil production from Hurricane Ida.
Brent crude futures for October, due to expire on Tuesday, were down 46 cents, or 0.6 percent, at $72.95 a barrel, after gaining nearly 1 percent on Monday. The more active November contract fell 42 cents, or 0.6 percent, to $71.81.
But the OPEC+ sources said the recent rise in oil prices was temporary, driven mainly by disruption of supply in Mexico and the severe storm hitting the US Gulf Coast over the weekend.
“Current oil prices around $70 are okay. OPEC+ is likely to continue as planned with the increase of 400,000 bpd,” said one source.
Another OPEC+ said it was “very likely” that the 400,000 bpd increase would go ahead from September.
Kuwait oil minister Mohammad al-Fares on Sunday told Reuters that this week OPEC+ would discuss whether it would continue with its planned increase or reconsider it and halt the rise adding that economies of East Asian countries and China were still affected by COVID-19 and caution should be exercised.
He later told state news agency KUNA that Kuwait supports any decision taken by OPEC+ ministers based on consensus.
Hurricane Ida shuttered or curtailed output at six refineries in Louisiana that process 1.92 million barrels per day (bpd) of crude, around 12 percent of US refining capacity.
“With companies currently assessing damages, a current timeline for how long shuttered capacity will be down is still uncertain,” RBC analysts said in a note.
With “catastrophic” damage to the grid in Louisiana, power outages could last three weeks, utility officials said, which would slow efforts to repair and restart energy facilities.
On the supply side, about 1.72 million bpd of oil production remained shut in the US side of the Gulf of Mexico as platforms were evacuated ahead of the hurricane, with companies expecting it to take days to get a full assessment of possible damage.
Meanwhile, China’s demand for spot crude appears to be recovering after nearly five months of slower purchases caused by a shortage of import quotas, drawdowns from high inventories and COVID-19 lockdowns that muted Chinese fuel consumption.
