Oil slips more than 1% ahead of key meeting between OPEC and allies

Flames burn off at an oil processing facility in Saudi Aramco's oilfield in the Rub' Al-Khali desert in Shaybah, Saudi Arabia, in October 2018.
Simon Dawson | Bloomberg | Getty Images

Oil prices slid on Tuesday before this week's OPEC+ meeting where producers are expected to ease supply curbs as economies start to slowly recover from the coronavirus crisis.

OPEC Secretary General Mohammad Barkindo said the outlook for oil demand was looking more positive, particularly in Asia, and headwinds from last year continued to abate.

Brent crude dipped 99 cents, or 1.55%, to $62.70 per barrel, after easing back from last week's more than one-year peak above $67. U.S. West Texas Intermediate (WTI) was 28 cents higher at $60.92 per barrel, also down from last week's high.

Prices slipped after a recent rally on expectations that the Organization of the Petroleum Exporting Countries and its allies, a group known as OPEC+, would add more oil to the market from April as they ease back on last year's deep supply cuts.

"With the speculative market heavily long, the past three sessions' falls look corrective ahead of Thursday's meeting," said Jeffrey Halley, market analyst at OANDA.

OPEC+, which meets on Thursday, could discuss allowing as much as 1.5 million barrels per day (bpd) back into the market.

OPEC oil output fell in February as a voluntary cut by Saudi Arabia added to reductions agreed to in a previous OPEC+ pact, a Reuters survey found, ending a run of seven consecutive monthly increases.

In Asia, China's factory activity growth slipped to a nine-month low in February, which could curtail Chinese crude demand. Oil buying by the world's top importer has recently eased.

"There are signs that the physical market is not as tight as futures markets suggest," ING Economics said in a note.