Singapore, November 03, 2021: Oil fell as major crude consumers intensified pressure on OPEC+ to boost supplies when it meets this week and after a report showed American oil inventories are at the highest since August.
Futures in New York fell as much as 3.7% on Wednesday, the most in more than a week. OPEC+ meets virtually Thursday to review output plans with the U.S., India and Japan calling on the group to raise supply faster. In the U.S., crude inventories increased 3.29 million barrels last week and production also edged higher, according to a government report.
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“OPEC is basically up to where they were pre-Covid and there’s a big question mark of how much extra capacity they have,” Irene Rummelhoff, executive vice president of marketing, midstream and processing at Equinor, said in a Bloomberg Television interview.
Oil prices have soared this year as economies recover from the pandemic, boosting consumption. Despite the pressure from the U.S. and other importers, the cartel is expected to stick to a plan to raise output by a modest 400,000 barrels a day. Azerbaijan on Wednesday joined a roster of OPEC+ nations that have said a modest increase would be enough.
The Energy Information Administration data on Wednesday also showed U.S. crude production rose by 200,000 barrels a day to the highest since before Hurricane Ida hit U.S. Gulf of Mexico production at the end of August.
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Oil prices have also been under pressure as the Federal Reserve may start tapering monetary stimulus in a first step toward an eventual increase in interest rates. The central bank is expected to announce later Wednesday that it will begin winding down the bond-buying program put in place last year to combat fallout from the pandemic.
