Oil prices drop on symbolic OPEC+ production cut
Oil prices reversed gains from the previous session on Tuesday, as OPEC+'s agreement to cut output by 100,000 bpd in October was seen as a largely symbolic move to support prices after the market's recent plunge.
Brent crude futures fell 49 cents, or 0.5%, to $95.25 a barrel as of 0638 GMT.
West Texas Intermediate (WTI) crude futures inched up to $88.94 a barrel and were $2.07 higher, or 2.4%, than Friday's close. No action was taken on Monday, the US Labor Day holiday.
The Organization of the Petroleum Exporting Countries and their Russia-led allies decided to reverse a 100,000-barrel increase in September after top producer Saudi Arabia and other members expressed concerns about the drop in prices since June despite tight supply.
Analysts, who did not expect an agreement even after Saudi Arabia said it wanted to support prices, said the cut was symbolic and would have a limited impact on actual supply given that it was producing below OPEC+'s production targets.
A headline production cut of 100 mbbls/d would actually be much smaller, with many manufacturers already failing to meet their targets and producing well below what they should be.
However, this stance shows that OPEC+ is watching the global demand very closely and is trying to manage supply to keep a floor on oil prices.
Other factors weighing on the market include a weaker outlook for oil demand due to renewed lockdowns in parts of China, as well as the AB's agreement to set a ceiling price on Russian oil exports.
Russia will send more products to Asia in response to oil price ceilings, Russia's energy minister Nikolai Shulginov told reporters at the Eastern Economic Forum in Vladivostok on Tuesday.
By supporting prices, the European Union's foreign policy chief is less hopeful of reaching an agreement on reviving the Iran nuclear deal, which will delay the return of nearly 1 million barrels of Iranian crude to the market.
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