London — Oil steadied near $85 a barrel on Tuesday, not far from a multi-year high, supported by signs that supply from OPEC and other producers is falling short, although expectations of a rise in U.S. inventories was weighing.
The increase in OPEC’s oil output in October undershot the rise planned under a deal with allies, a Reuters survey found on Monday, due to involuntary outages and limited capacity in some smaller producers.
Brent crude was unchanged at $84.71 a barrel by 1100 GMT, while U.S. West Texas Intermediate (WTI) crude fell 18 cents, or 0.2%, to $83.87.
“The oil rally faces some headwinds this week,” said Jeffrey Halley of brokerage OANDA. “Oil looks very much like it is going to range-trade ahead of the OPEC+ meeting on Thursday.
The price of Brent has surged more than 60% in 2021, hitting a three-year high of $86.70 last week as demand recovers and the Organization of the Petroleum Exporting Countries and allies led by Russia, or OPEC+, eases record output cuts slowly.
“Demand for crude oil is expected to rise as winter months approach,” said Naeem Aslam of Avatrade. “On the other hand, supply is expected to remain the same.”
OPEC+, which cut output by 9.7 million barrels per day or about 10% of daily demand in 2020, has been sticking to gradual, monthly production increases of 400,000 bpd, despite calls for more from the United States and other consumers.
The alliance is expected to do just that at its next meeting, scheduled for Thursday.
Weighing on prices were expectations this week’s snapshot of U.S. supply will show another rise in crude inventories. Analysts in a Reuters poll see an increase of 1.6 million barrels.
Industry group the American Petroleum Institute releases the first of this week’s two supply reports at 2030 GMT.
*Jessica Jaganathan; Editing: Kirsten Donovan – Reuters