Oil up 2% on supply worries ahead of OPEC+ meeting

Sticker reads crude oil on the side of a storage tank in the Permian Basin in Mentone, Loving County, Texas, US Nov. 22, 2019. REUTERS/Angus Mordant

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  • US House Speaker Pelosi arrives in Taiwan
  • Factories under pressure from higher prices, weak customer demand
  • OPEC+ meets on Wednesday to discuss whether to ramp up output
  • Coming Soon: Weekly API Oil Data at 4:30 PM ET/2030 GMT

NEW YORK, Aug. 2 (Reuters) – Oil futures rose about 2% Tuesday as traders worried that OPEC+ producers’ meeting this week would not lead to a further increase in crude supply.

The Organization of Petroleum Exporting Countries and allies, including Russia, known as OPEC+, will meet on Wednesday. Two of the eight sources said a modest production increase would be discussed. The rest said a boost was unlikely.

OPEC+ lowered its forecast for an oil market surplus this year by 200,000 barrels per day (bpd) to 800,000 bpd, three delegates told Reuters. [nL1N2ZE104]

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Brent futures were up $1.65, or 1.7%, to $101.68 a barrel at 12:25 a.m. EDT (1625 GMT). US West Texas Intermediate (WTI) crude rose $1.60, or 1.7%, to $95.49.

“There is a lot more uncertainty this time around,” Craig Erlam of brokerage OANDA said of the OPEC+ meeting. “This week’s decision will tell us how united the group still is.”

Russia’s invasion of Ukraine in February fueled concerns about global oil supplies and pushed prices up. In March, Brent jumped close to its all-time high of $147.50 a barrel. But as central banks raise interest rates to fight inflation, concerns about slowing growth have overshadowed the tight supply.

Surveys showed that factories in the United States, Europe and Asia struggled for momentum in July as global demand weakened and China’s strict COVID-19 restrictions slowed production. read more

“These measurements have not allayed fears of a recession,” said Tamas Varga of oil broker PVM.

Clouds over the market are casting concerns that US House Speaker Nancy Pelosi’s visit to Taiwan will escalate tensions between the United States and China. Stocks fell and bond yields fell on concerns about the visit. read more

The United States, meanwhile, has imposed sanctions on Chinese and other companies that allegedly helped sell tens of millions of dollars worth of Iranian oil and petrochemicals to East Asia. Washington is trying to increase pressure on Tehran to curb its nuclear program. read more

Analysts polled by Reuters, who also support crude oil prices, predict US crude inventories fell by 500,000 barrels last week. ,

The American Petroleum Institute (API), an industry group, will release its US inventory report at 4:30 PM EDT (2030 GMT). the US Energy Information Administration (EIA) reports Wednesday at 10:30 a.m. EDT (1430 GMT).

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Additional coverage by Muyu Xu in Singapore and Alex Lawler in London; Editing by Marguerita Choy, Mark Potter and David Gregorio

Our Standards: The Thomson Reuters Trust Principles.

Scott Disavino

Thomson Reuters

Covers the North American electricity and natural gas markets.

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