Oil drops ahead of OPEC+ meeting to discuss supply policies
Oil fell on Monday ahead of a meeting at which OPEC and its allies will consider discussions about increasing supply and recovery from the COVID-19 pandemic.
Brent crude fell 14 cents, or 0.2%, to $79.14 a barrel as of 0505 GMT. It rose 1.5% last week and recorded its fourth consecutive weekly gain. West Texas Intermediate (WTI) oil fell 15 cents, or 0.2%, to $75.73 after the last six weeks.
Oil prices soared amid supply disruptions and a surge in global demand, with Brent hitting a three-year high last week, hitting over $80.
Investors are currently focused on today's OPEC+ meeting. Risk appetite increased as confidence in a strong recovery in global growth increased.
The Organization of the Petroleum Exporting Countries (OPEC) and its allies, including Russia, are facing pressure from some countries to produce more as demand is recovering faster than expected in certain parts of the world.
OPEC+ agreed in July to increase production by 400,000 barrels per day (bpd) each month until at least April 2022, phasing out 5.8 million barrels of existing cuts.
Today's meeting is critical, as some OPEC sources are talking about plans to increase production more than anticipated. Since the October volumes were determined at the previous OPEC+ meeting, the next meeting will take place in November at the earliest.
The situation became even more critical as oil prices soared to a three-year high, gas prices rose 300% and traded close to $200 a barrel due to shortages in supply and low production of other fuels. The switch to fuel and other raw products for electricity generation and other industrial needs has been fueled by the massive rise in gas prices.
The irregularity of the post-pandemic recovery leads to unpredictable uncertainty on the demand side and volatility in oil prices.
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