Oil drops as OPEC+ considers boosting production
Oil prices fell on Friday on expectations that the OPEC+ supplier alliance could spur production growth planned to ease supply concerns, and that rising gas prices will encourage power producers to switch from gas to oil.
Brent crude futures were down 7 cents, or 0.1%, to $78.24 a barrel at 0415 GMT, but still heading for a small weekly gain, with a fourth consecutive week of gains.
West Texas Intermediate (WTI) crude futures fell 6 cents to $74.97 a barrel, but the contract is on track to post gains for the sixth week in a row.
All eyes are now on the Organization of the Petroleum Exporting Countries (OPEC) and its Russia-led allies at a meeting on Monday where producers will discuss going beyond the current agreement and increasing their output by over 400,000 barrels per day in November and December.
But rising the supply is a scenario with no details on volumes or dates, with an oil backdrop near a three-year high and consumer pressure for more supply.
Considering the high prices, it seems logical to increase production further. The last time we saw $80, the supply was much higher than where we are now, and there is room for extra barrels right now given the global energy crisis.
Monday's OPEC+ meeting will be crucial to the direction of oil prices next week. A production increase of over 400,000 barrels will provide short-term relief.
The White House said the Biden administration's concerns over high oil prices are on the agenda for a meeting with Saudi Crown Prince Mohammed bin Salman earlier this week.
With natural gas prices rising globally, electricity producers are turning to fuel or diesel instead of gas, pushing oil prices up. Generators in Pakistan, Bangladesh and the Middle East have already started changing fuel.
This signals strong oil demand in the coming months, and a tighter-than-expected oil market by the end of the year.
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