By Adedapo Adesanya
Crude oil futures edged up on Tuesday ahead of a meeting of producers this week that may not lead to a further boost in supply amid concerns a possible global recession could limit energy demand.
The Organisation of the Petroleum Exporting Countries and allies including Russia, known as OPEC+, meet on Wednesday with some saying a modest output hike would be discussed.
OPEC’s Joint Technical Committee (JTC) estimated that this year’s global oil market surplus would be 800,000 barrels per day —a downward revision of 200,000 barrels per day from last month’s estimate.
The full OPEC+ group, including Russia, is set to meet to determine the group’s production strategy for September. The group has officially rolled back the full amount of the targets as of August, although the group has so far seriously undershot its production targets by millions of barrels a day.
This helped the price of the Brent futures rise 51 cents or 0.5 per cent to settle at $100.54 a barrel, while the United States West Texas Intermediate (WTI) crude rose 53 cents or 0.6 per cent to settle at $94.42 per barrel.
Also boosting the market were worries that US Speaker of the House Nancy Pelosi’s visit to Taiwan will escalate tensions between the US and China.
China put its military on high alert and said it will launch “targeted military operations” in response to the visit.
The United States, meanwhile, imposed sanctions on Chinese and other firms it said helped to sell tens of millions of Dollars in Iranian oil and petrochemical products to East Asia as it tries to raise pressure on the Middle East countries to curb its nuclear programme.
Analysts have said a nuclear deal with Iran could add about 1 million barrels per day of crude to the world supply.
This is happening as data showed that manufacturers across the United States, Europe and Asia struggled for momentum in July as dwindling global demand and China’s strict COVID-19 restrictions slowed production.
Pressure also came as the American Petroleum Institute (API) reported a surprise build this week for crude oil of 2.165 million barrels, while analysts predicted a draw of 467,000 barrels.
The build comes as the US Department of Energy released 4.6 million barrels from the Strategic Petroleum Reserves (SPR) in the week ending July 29, to 469.9 million barrels.
US crude inventories have shed some 63 million barrels since the start of 2021, with a 40,000 barrel loss since the start of 2020, according to API data.
The market will be waiting for the official data from the Energy Information Agency (EIA) due on Wednesday.
Dipo Olowookere