Crude oil prices retreat ahead of OPEC+ meeting

Yahoo Finance's Jared Blikre breaks down the latest moves in the oil market and where crude oil might go from here.

Video transcript

- Welcome back in to Yahoo Finance Live as we are watching the market action. All three major indices now in the red here. And one of those sectors maybe dragging down the S&P 500 just a little bit here is energy, off by about a 1/3 of 1% as we are seeing oil prices retreat. And pressure mounting here from President Biden alongside other world leaders, pressuring OPEC Plus to increase their production levels as oil prices have shot up here over the last few weeks, but retreating today. For more on all those moves here, Jared, I want to just bring you on to highlight a bit of what we're seeing in today's session.

JARED BLIKRE: Sure. And let's just take a look at the YFi interactive, get a brief overview of the energy sector, as you said, one of the worst performing sectors today off by about a 1/3 of a percent. Exxon off about 9/10 of a percent. Royal Dutch Shell off a little bit more. But I want to get to the action in crude oil where, as you said, Zach, heading down. And a couple of things on the radar.

First, there is a big OPEC Plus meeting that begins tomorrow. And the reason this one is in focus is because as you said, there's increasing pressure by world leaders, including President Biden, to get the price of energy down as that is an inflationary drag on the economy. Now this is a two-month chart of crude oil. You can see it's been basing between basically $80 and $85, $86 per barrel there. And in that trading range, we have now head down to the bottom. So have to see what happens here.

Now what happened today. We got the weekly figures from the Department of Energy on crude oil stockpiles as well as some of the gasoline and distillates. So there was a surprise build of 3.3 million barrels. The median estimate was for lower, 2.25 million barrels. But the situation in Cushing, Oklahoma is also pretty interesting, because we saw another drawdown there. It looks like Cushing crude is down 916,000 barrels. And that has been a four-week trend, where they are running out of crude there, getting to historically low levels.

Now on the flip side, we're seeing a build in inventories on the Gulf Coast. So just kind of highlights the fact that even though WTI crude trades on an exchanges, though it's fungible, you still have lots of transportation issues, even marketing issues that can drive the price higher or lower at different-- different places.

Some other things that we're looking at in the oil market just in general. The value trade, as that has kind of exploded over the past few weeks. In fact, you can see in this chart which goes back to September. That was really the liftoff date for crude. But just kind of getting back to the OPEC Plus situation, they have been on a glide path toward increase in production, but I don't see them caving to pressure, because simply, Zach, they have not done that historically.

- There's-- the there's the off side too, that the US could start tapping its stockpiles in terms of--

JARED BLIKRE: Won't matter. It won't matter.

- --oil here. You don't think it'll matter because of the size, sheer size?

JARED BLIKRE: It hasn't before. It won't now.

- You know, what could matter more too is just in terms of what OPEC Plus decides to do. We've seen some companies saying that the modest increase of 400,000 barrels a day is going to be chill. It's going to be fine. We'll see if they change their tune in terms of what's requested there as that pressure mounts from other world leaders.