By Gina Lee
Investing.com – Oil was down on Thursday morning in Asia, falling by around $3 a barrel in early Asian trading. Investors cashed in on a recent rally with an Organization of the Petroleum Exporting Countries (OPEC) and allies meeting later in the day set to pave the way for expected output increases.
Brent oil futures fell 1.69% to $114.33 by 11:26 PM ET (3:26 AM GMT) after gaining 0.6% during the previous session. WTI futures slid 1.87% to $113.10, after gaining 0.5% on Wednesday. Both Brent and WTI futures have been on an upward trend for several weeks, as European Union and U.S. sanctions against Russia over its invasion of Ukraine on Feb. 24 squeezed Russian exports.
China's easing of some COVID-19 lockdowns has added to price support, but a strengthening U.S. dollar limited the black liquid's gains.
"Investors took profits ahead of the OPEC+ meeting and on the higher dollar," Fujitomi Securities Co Ltd. chief analyst Kazuhiko Saito told Reuters.
"We expect no surprise from OPEC+ as the group is unlikely to change their policy when Russian Foreign Minister Sergei Lavrov is visiting Saudi Arabia," he said. Saito also predicted the market will regain ground after the meeting as tightness in global supply persists and fuel demand in the U.S. and Europe remains strong.
OPEC+ is widely expected to stick to its monthly modest oil output increases, five OPEC+ sources said on Wednesday. An OPEC+ technical committee trimmed its forecast for the 2022 oil market surplus by about 500,000 bpd to 1.4 million bpd, according to two OPEC+ sources.
Some OPEC members were also considering whether to suspend Russia from the deal to allow other producers to pump more crude as per the U.S. and European nations’ wishes, according to the Wall Street Journal. However, two OPEC+ sources told Reuters that the topic was not discussed during Wednesday’s technical meeting, and six other OPEC+ delegates said the idea was not being discussed by the group.
Meanwhile, Wednesday’s U.S. crude oil supply from the American Petroleum Institute showed a draw of 1.181 million barrels for the week ended May 26. Forecasts prepared by Investing.com had predicted a draw of 67,000 barrels, while a 567,000-barrel build was recorded during the previous week.
Investors now await crude oil supply from the U.S. Energy Information Administration, due later in the day.