By Peter Nurse
Investing.com -- Oil prices fell Friday ahead of next week’s meeting of the Organization of the Petroleum Exporting Countries, with the view growing that these top producers could sanction a larger than previously agreed increase in output.
By 9:20 AM ET (1320 GMT) AM ET, U.S. crude futures were down 0.3% at $74.81 a barrel, while Brent futures were down 0.1% at $78.22 a barrel.
U.S. Gasoline RBOB Futures were up 0.7% at $2.2085 a gallon.
The Organization of the Petroleum Exporting Countries and allies, known as OPEC+, meet on Monday. Reuters reported that the group was looking at going beyond an existing deal to add 400,000 barrels per day to supply each month given the pressure from consumers such as the United States and India to help reduce prices.
“Given the current environment, we believe it is safe to assume that an increase of at least 400Mbbls/d for November is guaranteed. The bigger uncertainty is whether the group will be willing to ease more aggressively,” said analysts at ING, in a note.
That said, crude has posted strong gains this year - both contracts are up over 50% year to date - and more gains are possible, especially after China ordered its state-owned companies to secure energy supplies for winter at all costs, suggesting the price of oil products including fuel oil and diesel will rise.
“Spot Asian LNG is trading at an oil equivalent of around US$177/bbl and so there is a clear incentive for gas-to-oil switching,” ING added. “This suggests that we should see stronger oil demand in the coming months, which means a tighter than expected oil market through until the end of the year.”
Later in the session sees the release of Baker Hughes (NYSE:BKR) weekly oil rig count data, which will provide some indication of whether U.S. shale drillers are able to meet the increase in global demand for energy.
The rig count hit its highest level since April 2020 last week, as the rise in oil prices means that more and more oil fields become profitable to exploit.
CFTC data on speculative net positioning are also scheduled for release later Friday.