OPEC under spotlight as oil prices drop

In the first trading day of the week, crude oil prices fell ahead of an OPEC+ meeting that may determine whether a recent rally in prices can be sustained as the world slowly recovers from the COVID-19 pandemic.

At the time of writing, Brent crude futures were trading at $79 a barrel after declining by 0.3%. Brent crude rose 1.5% last week, its fourth consecutive weekly gain. The price of U.S. crude oil fell 0.4% to $75.6 a barrel after rising for six weeks.

Brent crude prices reached an almost three-year high above $80 last week despite supply disruptions and recovering global demand.

Investors are focused on the upcoming OPEC+ meeting, which has “increased risk appetite” due to confidence in a strong global economic recovery.

A meeting of OPEC+, which includes allies such as Russia, is later scheduled for today.

As demand in certain parts of the world has recovered faster than expected, some countries are pushing the group to produce more in order to help lower prices.

In July, OPEC+ agreed to phase out 5.8 million barrels per day of existing cuts by increasing production by 400,000 barrels per day every month until April 2022 at the latest. Recently, OPEC+ sources have revealed that producers may add more than that deal called for.

OPEC+’s last meeting decided volumes for October, so any increase would not occur until November.

As a result of the surge in oil prices, gas prices have also increased by 300% and are close to $200 per barrel in comparable terms, prompting a switch to fuel oil and other crude products for generating electricity and meeting other industrial needs.