Crude prices lower ahead of OPEC+ meeting

On Monday, crude prices edged lower ahead of a meeting of top producers, which may lead to greater production being added to the global market. While overnight weakness in Asia negatively affected sentiment in Europe, with the Hang Seng index in Hong Kong down more than 2% and the Nikkei index in Japan down more than 1%.

Concerns about China's property sector led to these losses as shares of Evergrande were suspended after it missed an essential interest payment for the second time last week as it struggles to refinance over $300 billion in liabilities.

According to news reports Monday, the distressed property developer is selling half its stake to Hopson Development for more than $5 billion. It was unclear, however, how any funds would be allocated.

Besides China's property market woes and the broader regulatory crackdown that can hurt an already fragile Chinese economy and drag on global growth, markets are also concerned about lower central bank spending on bond purchases soon due to rising inflation.

Global inflationary pressures are being exacerbated by rising oil, gas, coal, and power prices resulting in a slowing economic recovery worldwide.

A lack of supply and low production of other fuels has contributed to a strong price rise for oil, exacerbated by a steep increase for gas, which has increased 300% and trades near $200 a barrel due to supply shortages.

Crude prices consolidate in a triangle pattern

Crude prices are now consolidating in a triangle pattern above the support level of 75.15. However, the recent highs for crude oil might be rejected and pushes prices to the lower line of the pattern as OPEC+ is considering another production boost in the upcoming meeting.

Conversely, if buyers maintain the support zone, they might keep the rally in check toward the day peak at 75.93.

To phase out existing cuts of 5.8 million barrels per day, OPEC and allies led by Russia, called OPEC+, agreed in July to boost production by 400,000 barrels per day until April 2022.

Producers are likely considering adding more than what the deal envisaged, and markets are awaiting more details about when and how much more would be added.

The next possible month to increase would be November since OPEC+ already decided on October volume at the previous meeting.

Events of the day

On Monday, the Eurozone's finance ministers will meet at 13:00 EEST to discuss recovery plans and the much-derailed banking union.

In parallel, the Organization of Petroleum Exporting Countries and its allies, a group known as OPEC+, meet. Several major consumers, including the US and India, put pressure on producers to increase supply to lower prices.