Oil flat to weaker ahead of OPEC+ meeting

© Reuters. FILE PHOTO: Sticker reads crude oil on the side of a storage tank in the Permian Basin in Mentone, Loving County, Texas, U.S. November 22, 2019. REUTERS/Angus Mordant

By Sonali Paul

MELBOURNE (Reuters) - Oil prices were flat to weaker on Wednesday ahead of a meeting of OPEC+ producers, stabilising after a drop of 1% in early trade amid fears that a slowdown in global growth would hit fuel demand.

Brent crude futures were last down 3 cents, or 0.03%, at $100.51 a barrel at 0603 GMT. West Texas Intermediate (WTI) crude futures were flat at $94.42 a barrel.

The Organization of the Petroleum Exporting Countries and allies including Russia, together known as OPEC+, meet on Wednesday. OPEC+ sources told Reuters last week that the group would likely keep output unchanged in September, or raise it slightly.

Analysts are expecting no change due to a weak outlook for demand as recession fears grow, and said top producer Saudi Arabia may be reluctant to beef up output at the expense of OPEC+ partner Russia, hit by sanctions due to the Ukraine conflict.

"This week's main event for oil remains today's OPEC+ decision and that should keep prices somewhat rangebound until OPEC and its partners decide what to do with September's output," Edward Moya, senior market analyst at OANDA, told Reuters.

"OPEC+ is not even coming close to hitting their production targets, so oil prices will likely remain supported even if they announce a small output increase for September," he said.

Ahead of the meeting, OPEC+ trimmed its forecast for an oil market surplus this year by 200,000 barrels per day (bpd), to 800,000 bpd, three delegates told Reuters.

Several factors are weighing on the demand outlook, including rising fears of an economic slump in the United States and Europe, debt distress in emerging market economies, and China's COVID-zero policy curbing activity in the world's top oil importer, Commonwealth Bank analyst Vivek Dhar said.

"We see growing downside risks to our oil price forecast of $US100/bbl in Q4 2022 as global demand concerns continue to grow," Dhar said in a note.

Adding to the bearish view on demand, data from the American Petroleum Institute, an industry group, showed U.S. crude stocks rose by about 2.2 million barrels for the week ended July 29, against analysts' expectations for a decline of around 600,000 barrels. [API/S]

Gasoline inventories fell by 200,000 barrels, which was a smaller drawdown than analysts had expected, although distillate stocks fell by about 350,000 barrels against analysts' forecasts for a build.

The market will be looking to see if official data from the U.S. Energy Information Administration (EIA) at 1430 GMT confirms the inventory view.