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Crude oil is on soft form today as markets await news on the next OPEC meeting and today’s US crude oil storage data.

WTI and Brent futures contracts for August have crept below opening levels ahead of the EIA data. Earlier in the session, crude oil had spiked above $38, while Brent had broken above $40 per barrel – both of which were the highest levels since early March.

Oil weak as news of OPEC meeting disappoints

Both crude oil and Brent oil have been on volatile form today as markets struggle to decide what seems to be the most likely outcome of the upcoming OPEC meeting.

Markets had been encouraged earlier in the week by indications that the meeting would be moved forwards to tomorrow (Thursday, June 4th), suggesting that members were keen to agree a deal to keep supporting prices.

There had been rumours that the current record level of production cuts, which at 9.7 million barrels per day equates to nearly 10% of global demand, would be extended all the way to the end of the year.

Compliance with the cuts has been running at around 75%, and the latest reports indicate that this is causing tensions amongst members of the cartel. Reuters has reported today that the OPEC+ group, which comprises the cartel and its allies, is likely to extend the cuts by one month.

This has not impressed markets, with traders having hoped for several more months of the higher production curbs.

Can EIA crude oil inventories data support prices ahead of OPEC meeting?

Data from the American Petroleum Institute released yesterday showed a surprise drawdown of half a million barrels. This was against market expectations of a 3 million barrel build.

Today’s official EIA data is also expected to show a build of 3 million barrels, after stocks rose by nearly 8 million barrels the previous week. A surprise draw in line with the API figures could lend some support to crude oil prices, although the issue of OPEC will remain the key driver of price action.

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