Oil Futures Tumble After Hitting Near 7-year High, Settle Sharply Lower

Crude oil futures settled sharply lower on Tuesday as prices plunged after hitting a near 7-year high, amid uncertainty about the major oil producers’ possible take on their production policy.

The Organization of the Petroleum Exporting Countries and its allies were originally scheduled to decide on increasing crude production last Thursday. However, the meeting got postponed to the following day, and was subsequently abandoned due to disagreement between Saudi Arabia and the UAE over output hike.

The United Arab Emirates agreed to go along with output increases but rejected a separate proposal to extend curbs to end-2022.

No date has been set as yet for resumption of talks but Iraqi Oil Minister Ihsan Abdul Jabbar said he hoped that within 10 days a date would be set for a new OPEC+ meeting.

The disagreement resulted in a sharp jump in oil prices late last week, and crude oil extended its uptick this morning. However, with the the dissent in the Group raising uncertainty about a meaningful agreement on oil production, prices tumbled

West Texas Intermediate Crude oil futures for August ended down by $1.79 or about 2.4% at $73.37 a barrel, well off the session’s high of $76.98, the best level since November 2014.

Brent crude futures, which rose to their highest level since late 2018, ended down by $2.63 or about 3.4% at $74.52 a barrel today.

Traders now look ahead to weekly oil reports from the American Petroleum Institute (API) and U.S. Energy Information Administration (EIA), due on Wednesday and Thursday, respectively.

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