OPEC+ will increase November production by a smaller-than-expected 137,000 bpd. However, the prospect of an oversupply is still weighing on prices. Oil prices continued their rise on Tuesday as OPEC+’s smaller-than-expected November production increase helped ease fears of a growing oversupply.
Brent crude futures rose 19 cents, or 0.29%, to $65.66 a barrel by 06:23 GMT. WTI Crude rose 19 cents, or 0.31%, to $61.88.
Both contracts closed more than 1% higher in the previous session after OPEC+ decided to increase total daily oil production by 137,000 bpd starting in November.
Analysts noted that this move contradicted market expectations for a more aggressive supply restart and indicated the group’s caution about increasing its share of the global oil market amid forecasts of oversupply in the fourth quarter and next year.
Russia appears to have weighed in on this issue.
Brent crude fell by about $5 per barrel last week in response to earlier expectations of a larger supply increase, so this slight recovery appears plausible.
The market appears to be able to absorb this additional volume for now, and we haven’t yet seen a shift toward contango.
OPEC+ has raised its oil production targets by more than 2.7 million barrels per day this year, equivalent to about 2.5% of global demand.
Geopolitical factors have created a floor under prices. The dispute between Russia and Ukraine is impacting energy assets and creating uncertainty about Russian crude oil supplies.
Oil prices are under pressure due to production increases from both OPEC+ and non-OPEC producers, despite Ukrainian drone attacks disrupting supply from Russian energy facilities.
Analysts also noted that any slowdown in demand due to weak economic growth triggered by US trade tariffs is likely to further limit the supply glut.