- Oil prices have turned sideways at around $85.50 ahead of the OPEC meeting outcome.
- The US economy believes current economic fundamentals don’t support production cuts.
- A build-up of oil stockpiles is expected to be disclosed by the EIA.
West Texas Intermediate (WTI), futures on NYMEX, are juggling around $85.50 as investors are awaiting the outcome of the OPEC meeting to make informed decisions. The risk-perceived assets display some corrective moves as the risk-on market profile has eased a bit. Also, the US dollar index (DXY) has found interest near 110.20, which has resulted in a minor sell-off in the oil prices from a high above $86.00.
Wednesday’s OPEC meeting carries significant importance as it is the first face-to-face meeting of OPEC+ members after the emergence of the Covid-19 pandemic. Reports from RTRS dictate that OPEC will consider production cuts by two million barrels per day (bpd). The agenda of announcing production cuts is to support the oil prices.
Meanwhile, US officials are criticizing the move of further cuts in oil production as the current economic fundamentals don’t support the idea of tightening the oil market.
It is worth noting that the higher oil prices will delight Russia, which is providing oil at discounted rates to imported oil-dependent nations.
Apart from that, oil inventory data by the US Energy Information Administration (EIA) will be of utmost importance. The oil stockpiles are expected to build up by 0.097 million barrels for the past week ending September 30. The demand for oil is continuously declining in the US economy, which could be concluded from weaker US ISM Manufacturing PMI data released on Monday.
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