By Peter Nurse
Investing.com -- Oil prices weakened Tuesday, slipping back from seven-year highs on growing speculation that a group of top producers could increase global supply at a meeting later this week.
By 9 ET (1400 GMT), U.S. crude futures traded 1.1% lower at $87.20 a barrel, while the Brent contract fell 1% to $88.33.
U.S. Gasoline RBOB Futures were down 0.7% at $2.5354 a gallon.
This Organization of the Petroleum Exporting Countries and allies led by Russia, a group known as OPEC+, is set to meet on Wednesday to discuss future output levels, and had been widely expected to stick with its strategy of a cautious increase of 400,000 barrels a day per month, a stance it has taken since August last year.
However, influential investment bank Goldman Sachs suggested, in a note dated Jan. 31 that the surge in oil prices toward the $90 per barrel level could prompt the cartel to announce a bigger-than-expected rise in output.
““We view growing potential for a faster ramp-up at this meeting, given the pace of the recent rally and the likely pressure from importing nations,” Goldman analysts said. “The producers’ group may also be growing more concerned by the hawkish central bank shift that could lead to slower global growth and oil revenues later this year.”
The crude market has been on a tear this year as energy consumption continued to bounce back from the pandemic, while the increase in supply has been more cautious.
Both oil benchmarks recorded their highest levels since October 2014 on Friday, with prices boosted of late by the geopolitical uncertainty surrounding Russia's troop build-up on the border with Ukraine, the state of unrest in the Middle East, as well as the recent blast of icy U.S. weather.
“The problem with OPEC+ is that few members can increase production as much as their quotas allow, and in the process of doing this, they are reducing the global spare capacity, which becomes more vulnerable to supply shocks and geopolitical concerns, such as the Russia-West standoff over Ukraine,” according to analysis from OilPrice.com, in a note.
Attention will turn later in the session to the first of this week's U.S. supply reports. The American Petroleum Institute is set to release its report at 4:30 PM ET (2130 GMT), with analysts expecting crude stocks to have risen by 1.8 million barrels.