By Peter Nurse
Investing.com -- Oil prices weakened Thursday in a bout of profit-taking, slipping back from seven-year highs after OPEC+ agreed to another modest increase in global supply.
By 9:25 AM ET (1425 GMT), U.S. crude futures traded 0.7% lower at $87.64 a barrel, while the Brent contract fell 0.6% to $88.91.
U.S. Gasoline RBOB Futures were down 1% at $2.5815 a gallon.
This Organization of the Petroleum Exporting Countries and allies led by Russia, a group known as OPEC+, agreed on Wednesday to lift output by 400,000 barrels a day in March, sticking with its policy of cautiously restoring the supply that was shuttered at the height of the pandemic.
Friday’s CFTC Commitment of Traders report showed that oil traders cut their net-long positions last week, falling back from the ten-week highs recorded over the prior week. While the market remains overwhelmingly long, and prices just below record levels, a reduction in long positions was likely after the conclusion of the OPEC+ meeting.
That said, recent data has shown that a number of members of the group have been struggling to fulfil their portions of the overall announced increase.
“This has been evident for several months now, including for January,” said analysts at ING, in a note. “Preliminary numbers show that OPEC pumped 28.14MMbbls/d in January according to a Bloomberg survey. This is an increase of just 50Mbbls/d MoM, a far cry from the slightly more than 240Mbbls/d that OPEC could have increased production by.”
The tight global supply situation, coupled with geopolitical tensions in Eastern Europe and the Middle East, have boosted oil prices to seven-year highs so far this year.
Helping put a floor under today’s drop were forecasts of cold weather in central United States and parts of the Northeast this week, while U.S. crude stockpiles fell by one million barrels last week, according to the U.S. Energy Information Administration, indicating strong domestic demand.
In corporate news, oil major Shell (LON:RDSa) boosted its dividend and share repurchases once more after strong fourth quarter profits, boosted by higher oil and gas prices.