Oil edges lower as US pushes OPEC to pump more

Prices remained under pressure from concerns over power outages and flooding in US state

LONDON:

Oil slipped on Tuesday as OPEC and its allies geared up for a meeting on Wednesday amid calls from the United States to pump more crude, though Brent still traded well above $70 a barrel.

Prices were also under pressure from concerns that power outages and flooding in Louisiana after Hurricane Ida will cut crude demand from refineries.

Crude was also weighed down by manufacturing data from China, where factory activity in August expanded at a slower pace than in the previous month.

Brent crude futures for October, due to expire on Tuesday, fell $0.5, or 0.7%, to $72.91 a barrel by 1330 GMT. US West Texas Intermediate (WTI) crude futures were down $0.58, or 0.8%, at $68.63.

Both benchmarks were on track for their first monthly loss since March but were still not far from their July highs, when Brent rose to its strongest since 2018 and US crude since 2014.

In August, US President Joe Biden’s administration urged the Organisation of the Petroleum Exporting Countries (OPEC) to boost oil output to tackle rising gasoline prices.

Prior to the US call, OPEC and its allies, together known as OPEC+, had agreed to add 400,000 barrels per day (bpd) to their supply each month until the end of December.

Sources told Reuters the Wednesday meeting is likely to leave the plan unchanged despite pressure from the United States to pump more.

“It looks like sticking to the plan from the last meeting,” an OPEC+ source told Reuters.

Oanda analyst Craig Erlam also expects no changes to the OPEC policy. “It would be a surprise if they do anything at the moment, despite pressure from the White House, given current price levels, demand and (the) uncertain outlook,” he said.

OPEC’s own data showed the market will face a deficit until the end of 2021 but then flip into a surplus in 2022.

Hurricane Ida, which made landfall in the United States on Sunday as a Category 4 hurricane, knocked out at least 94% of offshore Gulf of Mexico oil and gas production and caused “catastrophic” damage to Louisiana’s grid.

On the supply side, about 1.72 million bpd of oil production and 2.01 million cubic feet per day of natural gas output remained offline on the US side of the Gulf of Mexico after evacuations at 288 platforms.