Oil prices were down in early trade on Wednesday, extending several days of losses amid uncertainty over how much supply producing countries will push to restore to the market at the OPEC+ meeting this week as the coronavirus pandemic continues to affect most countries.
Brent crude futures dipped 7 cents, or 0.1%, to $62.63 a barrel, down 7% from a 13-month high hit last week.
Oil Supply Uncertainty
The Organization of the Petroleum Exporting Countries (OPEC) and allies, together called OPEC+, are set to meet on Thursday, which could boost supply. However, there are certain uncertainties in the oil market outlook, such as the potential for worsening U.S.-Saudi relations.
The Biden administration last week released a report that implicated the Saudi government in the murder of journalist Jamal Khashoggi, which would be enough to sour bilateral relations, especially after the federal administration announced sanctions on a former senior Saudi intelligence officer said to be involved in the murder and the Kingdom’s Rapid Intervention Force.
While the oil world awaits the Thursday OPEC+ meeting and its outcome, Congress passed President Biden’s $1.9-trillion stimulus program and sent it to the Senate.
While it has yet to receive final approval, Congress passing strengthened the U.S. dollar, affecting oil prices negatively.
Additionally, there is also a growing fear that fuel demand growth in China is slowing down.