Title: Oil prices fall as investors await OPEC+ policy, eye Saudis

Jun 02, 2022 03:00AM ET

By: AnalysisWatch

Oil prices fell on Thursday as investors took advantage of the recent rebound in prices ahead of a meeting of major producers later in the day, with some speculation that Saudi Arabia could increase oil production in response to US urging.

Brent crude was down $2.07, or 1.8%, at $114.22 a barrel at 0649 GMT, after rising 0.6% the previous day.

US West Texas Intermediate (WTI) oil fell $2.21, or 1.9%, to $113.05 per barrel, after rising 0.5% on Wednesday.

The benchmark has been marching higher for several weeks as Russian exports have been pressured by EU and US sanctions against Moscow over its invasion of Ukraine, actions Russia calls a "special operation".

While China's gradual exit from the strict COVID-19 blockade has helped support prices, speculation that Saudi Arabia may step up production has weighed on the market, said Tsuyoshi Ueno, senior economist at NLI Research Institute.

Saudi Arabia is prepared to increase its oil production if Russia's output falls substantially because of Western sanctions imposed on it, the Financial Times reported Wednesday, citing sources.

Production increases scheduled for September would be brought forward to July and August, the newspaper said.

However, others expect OPEC+ - a grouping of the Organisation of Petroleum Exporting Countries (OPEC) and allied producers associated with it, including Russia - to keep its production policy unchanged.

Five OPEC+ sources said on Wednesday that OPEC would maintain its modest monthly increases in oil production despite seeing a tightening in global markets.

Saito predicted that the market, which has been hit by profit-taking, would regain ground after the meeting due to persistent global supply tightness and strong fuel demand in the United States and Europe.

The Wall Street Journal reported Tuesday that some OPEC members have considered suspending Russia from the agreed production plan to allow other producers to pump significantly more crude, as the United States and European nations want.