By Nia Williams
CALGARY, Alberta (Reuters) – Oil dropped below $85 a barrel on Tuesday, but remained close to a three-year high in choppy trade ahead of weekly U.S. supply reports expected to show a rise in crude inventories as traders also looked toward Thursday’s OPEC+ meeting.
Analysts in a Reuters poll expected weekly U.S. crude inventory data to show a rise of 1.6 million barrels [EIA/S]. Industry group the American Petroleum Institute releases the first of this week’s two supply reports at 2030 GMT.
Brent crude was down 21 cents, or 0.3%, at $84.50 a barrel by 1659 GMT, while U.S. West Texas Intermediate (WTI) crude fell 48 cents, or 0.6%, to $83.57. Earlier it had dropped more than $1 a barrel.
“There’s a little bit of uncertainty about OPEC and that’s holding the market back,” said Phil Flynn, an analyst at Price Futures Group in Chicago. “But we are still in a strong uptrend.”
Brent’s price has surged more than 60% in 2021, hitting a three-year high of $86.70 last week as global demand has recovered and the Organization of the Petroleum Exporting Countries and allies led by Russia, or OPEC+, have been slow to unwind record output cuts.
Consuming countries have been pressuring OPEC+ to do more to cool the market. But at Thursday’s meeting, the alliance is expected to stick to its plan for gradual, monthly production increases of 400,000 barrels per day.
Oil rose early, supported by a Reuters survey on Monday that found the October increase in OPEC’s output undershot the planned rise due to involuntary outages in some producers.
“We anticipate the relatively neutral trading will continue until we have more definition from OPEC on December production plans,” said Anthony Headrick, energy market analyst at commodity brokerage CHS Hedging in St. Paul, Minnesota.
In a sign that high prices are encouraging more supply elsewhere, BP said on Tuesday it will ramp up investments in onshore U.S. shale oil and gas business to $1.5 billion in 2022 from $1 billion this year.
(Additional reporting by Alex Lawler in London and Jessica Jaganathan; Editing by Kirsten Donovan, John Stonestreet and David Gregorio)
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