Oil dips on profit-taking ahead of Fed update

Oil slips awaiting OPEC+ response

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Oil prices fell on Thursday, and investors waited and watched how major producing countries would respond to the emergency crude oil release that major consumer countries aimed to cool the market, despite data showing healthy US fuel demand.

At 0201 GMT, US West Texas Intermediate (WTI) crude oil futures fell 9 cents, or 0.1%, to $78.30 per barrel, and continued to fall by 11 cents on Wednesday.

Brent crude oil futures fell 5 cents to US$82.20 per barrel, and fell 6 cents on Wednesday.

“The coordinated SPR (Strategic Petroleum Reserve) release may end up as a near-term political win for the parties involved, however, we do not expect it to have a lasting impact on crude fundamentals,” Fitch analyst Jake Leiby said in a note.

Analysts said U.S. Energy Information Administration data on Wednesday showed gasoline and distillate stockpiles fell more than expected even as crude stocks rose suggesting the market needed more crude.

“But the bigger picture is that product demand remains healthy, adding pressure to a tightening market,” Capital Economics economist Kieran Tompkins said in a note.

All eyes are now on the Organization of the Petroleum Exporting Countries, Russia and allies, together called OPEC+, who is due to meet next week to discuss oil demand and supply.

“The bold move from the oil importers has opened the door wide open for OPEC+ to adjust its supply policy downwards at its next (meeting on) 2 December 2021,” Rystad Energy analyst Louise Dickson said in emailed comments.

The group has increased its supply of 400,000 barrels per day per month in order to lift the record production cut that was set when the pandemic contained the impact of demand last year.

Three sources told Reuters that although the United States, Japan, India and other countries decided to release emergency oil stockpiles, OPEC+ did not discuss a suspension of production increases.

Traders are also concerned about whether China will implement plans to release oil from its reserves.

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