Oil futures made modest moves on Tuesday, with U.S. prices ending slightly higher, as investors awaited a meeting of major oil producers that’s expected to lead to more production, and continued to track tensions over Ukraine.
The Organization of the Petroleum Exporting Countries and its Russian-led allies, a group known as OPEC+, will hold a monthly meeting on Wednesday. “While there is a consensus expectation that the group will maintain status quo and extend gradual production increases through March, any comments around their longer-term view can trigger large swings in the market,” said Robbie Fraser, global research & analytics manager at Schneider Electric, in a daily note.
“Similarly, the actual production levels of different members relative to their target should be especially scrutinized in the coming months,” he said.
“Ultimately OPEC+ could again be challenged by individual members cheating [versus] quotas — something that is typically a major issue that the group has largely avoided during this round of cuts,” said Fraser.
West Texas Intermediate crude for March delivery CL.1, +0.01% CL00, +0.02% CLH22, +0.01% edged up by a nickel, or nearly 0.1%, to settle at $88.20 a barrel on the New York Mercantile Exchange. That was the highest settlement value for a front-month contract since Oct. 7, 2014, according to Dow Jones Market Data.
April Brent crude BRN00, -0.01% BRNJ22, -0.01%, the global benchmark, declined by 10 cents, or 0.1%, to end at $89.16 a barrel on ICE Futures Europe.
Read: Why OPEC+ may not want $100 oil prices
OPEC+ has so far stuck to a timetable that has seen it add 400,000 barrels a day to output in monthly increments, resisting calls by the U.S. and oil-consuming countries for larger increases. Members, meanwhile, have struggled to meet the increased quotas.
“OPEC is still unable to implement the agreed expansion of production,” said Carsten Fritsch, analyst at Commerzbank, in a note.
Citing data from a Reuters survey, he noted that output from the 10 OPEC members subject to production quotas rose by 230,000 barrels a day in January, falling short of the 250,000 barrels-a-day rise that had been agreed.
At a meeting on Tuesday, the OPEC+ Joint Technical Committee said it expects the overall oil-supply surplus in 2022 to reach 1.3 million barrels per day — less than the previous forecast of 1.4 million barrels per day, according to Reuters, which viewed a report prepared by the committee.
Meanwhile, oil traders continued to monitor developments tied to Ukraine, which can contribute global oil-supply risks.
The U.S. and Russia exchanged sharp accusations against each other over Ukraine at a meeting of the U.N. Security Council on Monday. On Tuesday, Russian officials denied reports that Moscow had sent Washington a written response to a U.S. proposal aimed at de-escalating the crisis over Ukraine.
Russia has massed around 100,000 troops near its border with Ukraine and taken other actions that have sparked fears an invasion of the neighboring country may be imminent. The U.S. and its allies have threatened harsh sanctions against Moscow in the event of an attack. Russia has insisted that NATO rule out membership for Ukraine and has made other security demands that the U.S. and its allies have deemed nonstarters.
In other Nymex energy trading Tuesday, March gasoline RBH22, +0.95% added 0.8% to $2.575 a gallon, while March heating oil HOH22, +1.01% added 0.9% to $2.741 a gallon.
March natural gas NGH22, -0.25% declined by 2.5% to $4.751 per million British thermal units, after posting a gain of 5.1% on Monday.
Read: European gas futures prices fall as Russia reportedly increases supplies
The Energy Information Administration’s weekly U.S. petroleum supplies report is due out Wednesday morning.
On average, analysts expect the government agency to report an increase of 1.1 million barrels in domestic crude supplies for the week ended Jan. 28, according to a survey conducted by S&P Global Platts. They also forecast a rise of 1.7 million barrels in gasoline inventories and a 1 million-barrel decline for distillate stockpiles.