Oil prices dip ahead of OPEC+ meeting

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Crude oil prices dipped in mid-morning trade in Asia earlier today as the market awaits the ministerial meeting of OPEC+ where the officials will discuss production policy.

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Most observers seem to expect no change to the current approach to price control although a couple of analysts have speculated that the Saudis might decide to start rolling back their voluntary production cuts.

“The market will be eager to see if there are any signs of a change in the group’s output policy, given the recent strength in the market. We do not believe that the group will change its output policy,” ING’s Warren Patterson wrote earlier this week.

“However, what is possible (and a JMMC meeting is not needed for this), is Saudi Arabia starting to ease its additional voluntary supply cut of 1MMbbls/d.”

Meanwhile, the latest jobs data from the United States suggested a still-tight labor market, sparking worry about the possibility of more rate hikes from the Fed, which pressured prices, with West Texas Intermediate dipping below $89 per barrel and Brent trading below $91.

“A resilient labor market is deemed to be providing more room for the Federal Reserve (Fed) to keep rates high for longer,” Reuters quoted IG analyst Yeap Jun Rong as saying.

“Oil’s downward move has very little to do with fundamentals and all to do with rising Treasury yields and the stronger U.S. dollar,” Warren Patterson, head of commodities strategy at ING, said as quoted by Bloomberg on September 3. “I still think oil has some room to move higher. Fundamentally, it is looking constructive.”

Some additional pressure on prices earlier this week came from news that Turkey was preparing to restart the flow of oil from Kurdistan to the Black Sea but Reuters reported that the Iraqi side is still negotiating the terms of the pipeline’s restart.

Russia, meanwhile, said it would not set an end date for the fuel export ban it implemented last month to address a domestic market shortage.