ALBAWABA – Contrary to the usual trend, oil prices fell about 1 percent on Tuesday against a weaker US dollar as markets hold for the upcoming meeting of the Organization of the Petroleum Exporting Countries and its allies (OPEC+) on November 26.
Brent crude futures fell $0.80 to $81.52 a barrel by 1017 GMT, according to Reuters, while West Texas Intermediate (WTI) crude futures also dropped by $0.80, or 1 percent, to $77.03.
The United States (US) Dollar slipped against a basket of major currencies, as Bloomberg’s dollar index spot fell 0.09 percent, by 0226 Amman time, to 103.3480.
Usually, a weaker US dollar prompts a rise in demand, which drives oil prices higher.
But OPEC+ is likely to extend or even deepen oil supply cuts into next year, eight of Reuters’ analysts have predicted.
Both contracts had climbed about 2 percent on Monday after three OPEC+ sources told Reuters that the group is considering additional oil supply cuts come their meeting next Sunday.
Oil prices usually exhibit an inverse relationship to the US dollar - Shutterstock
Slowing global growth is the main rationale for OPEC+ cutting supply, in order stabilize oil prices and markets in light of weakening demand, particularly from the US and China, the world’s top economies.
Oil has dropped about 16 percent since late September, net weekend gains, as crude output in the US, the world's top producer, held at record highs, according to Reuters.
The latest US inventory reports are forecast to show crude and gasoline stockpiles rose last week, a Reuters poll on Monday showed. Whereas the American Petroleum Institute’s report is scheduled to come out later on Tuesday.
Saudi Arabia, Russia and other members of OPEC+ have already pledged oil output cuts of 5.16 million barrels per day, or about 5% of daily global demand, in a series of steps that started in late 2022. Saudi Arabia and Russia have both also committed to additional voluntary cuts, to further bolster oil prices.
They have confirmed these cuts will continue until the end of 2023, and the group will meet next week to discuss and decide whether or not these oil cuts will carry into the new year.
