Before The OPEC+ Decision, Oil Prices Drop; Fed Speakers Hints Towards Tight Monetary Policy

Before an OPEC+ meeting, oil prices fell as market participants wait to see if the group will heed a US push to increase production. After finishing slightly higher for Tuesday, West Texas Intermediate slipped below $94 a barrel in early Asian trading. A Bloomberg survey of traders and analysts predicted that the alliance led by Saudi Arabia was more likely to agree to maintain output stable in September than agree on an increase. The Organization of Petroleum Exporting Countries and its allies will meet digitally later on Wednesday.

Investors were also monitoring the effects of House Speaker Nancy Pelosi's trip to Taiwan, which heightened US-China relations and decreased interest in risky assets. Pelosi, who will join President Tsai Ing-wen for a press conference, will be the highest-ranking American politician to visit the island in the past 25 years.

This week, oil prices fell to their lowest closing in more than five months, giving back the majority of the gains made since Russia's invasion of Ukraine. Investors' concerns about an economic downturn and indicators that the physical markets are loosening up have caused that decline. The Federal Reserve said on Tuesday that it would continue to tighten monetary policy in order to combat inflation.

US Vice President Joe Biden travelled to Saudi Arabia last month in an effort to persuade OPEC+ to increase petroleum production after gas prices reached a record high. An administration representative emphasised the possibility of a successful announcement from the group even if certain members haven't been able to fully satisfy their existing productivity requirements prior to this week's meeting.

OPEC+ was likely to agree to a "moderate" rise in output, according to Goldman Sachs Group Inc., according to a letter from analysts including Damien Courvalin. The global crude market is currently experiencing a 2 million barrel per day deficit, and stockpiles are close to record low levels, according to the bank.