Oil prices ticked up as the market is looking towards a meeting of OPEC and its allies as well as a Federal Reserve rate decision and U.S. government data on crude and fuel stockpiles on Wednesday.
Brent crude futures rose 45 cents, or 0.5%, to $85.91 a barrel. West Texas Intermediate (WTI) U.S. crude futures rose 62 cents, or 0.8%, to $79.49 a barrel.
Tamer U.S. rate hike expectations helped lower the dollar index index , which supported oil prices as a weaker greenback makes the commodity cheaper for buyers holding other currencies, according to Stephen Brennock, analyst at PVM.
The Federal Reserve is expected to deliver its decision at 2 p.m. ET.
Meanwhile, ministers of the Organization of the Petroleum Exporting Countries and allies including Russia are expected to stick with existing output targets at a virtual meeting scheduled for Wednesday.
OPEC’s oil output fell in January, as Iraqi exports dropped and Nigeria’s output did not recover, with the 10 OPEC members pumping 920,000 barrels per day (bpd) below their targeted volumes under the OPEC+ agreement, a Reuters survey found.
The shortfall was bigger than the deficit of 780,000 bpd in December.
Capping gains, data from the American Petroleum Institute industry group showed U.S. crude stocks rose about 6.3 million barrels, more than expected, in the week ended Jan. 27, according to market sources. Government stockpile data is due Wednesday.
“Commercial storage in North America is ample,” said Norbert Ruecker, economist at the bank Julius Baer.
“The improved market mood has lifted prices of late, but this support should remain temporary. We see lower prices longer term, in line with the futures market’s expectations.”
WTI is trading in contango , which means front-month delivery contracts are trading higher than later deliveries, indicating current oversupply.
Brent is in a shallow backwardation, the opposite market structure.