Oil futures edged lower as traders awaited a meeting of the Organization of the Petroleum Exporting Countries and its allies that was postponed until Friday after a dispute emerged over plans to further ease production curbs through the end of the year.
West Texas Intermediate crude for August delivery
was down 14 cents, or 0.2%, at $75.70 a barrel on ICE Futures Europe.
OPEC+ had been scheduled to wrap up proceedings Thursday, with investors expecting the group to agree to a deal backed by Saudi Arabia and Russia that would further reduce previously agreed output curbs by allowing production to rise by 400,000 barrels a day per month from August through December — putting an additional 2 million barrels a day of crude onto the market over the remainder of 2021.
An objection by the United Arab Emirates, however, during a meeting of an OPEC+ advisory panel, forced the delay. According to reports, U.A.E. argued that the production baseline used to determine the size of its production curb should be lifted. That would allow U.A.E. to pump more crude.
“The U.A.E. had already broken ranks to some extent last year, demanding special rights for itself. Overall, our sense is that OPEC+ has recently become almost too sure of itself in view of the high prices, the tight supply situation and the lack of response from outside the alliance,” said Eugen Weinberg, commodity analyst at Commerzbank, in a note.
If OPEC+ were to fail to come to a deal and leave existing curbs in place, it would be a positive development for crude.
If Friday’s talks fail, “further price spikes will be likely as the current supply is insufficient to meet the growing demand,” said Ricardo Evangelista, senior analyst at ActivTrades, in a note.
But the reaction by members eager to boost production to take advantage of higher prices in the event of an impasse can’t be guaranteed, analysts said.
“As we know, pride comes before a fall, and excessive self-confidence could harm the image of OPEC+ as a reliable trade partner, possibly provoking disputes within the group. This would probably weigh on the oil price in the medium term,” said Commerzbank’s Weinberg.
August natural-gas futures
fell 1.3% to $3.613 per million British thermal units.