NEW YORK: Oil prices rose by about USD1 on Monday after OPEC+’s planned production increase for November was more modest than expected, tempering some concerns about supply additions, though a soft outlook for demand is likely to cap near-term gains. Brent crude futures climbed USD1.07, or 1.66 percent, to USD65.60 a barrel by 12:52 p.m. EDT (1652 GMT), while US West Texas Intermediate crude was at USD61.84, up 96 cents, or 1.58percent.
“The market feel that the actual amount of oil that is going to hit the market is far less than what they announced, given that some of the OPEC+ members are already producing at capacity,” said Andrew Lipow, president of Lipow Oil Associates. On Sunday, the Organization of the Petroleum Exporting Countries, plus Russia and some smaller producers, said it would raise production from November by 137,000 barrels per day, matching October’s figure, amid persistent concern over a looming supply glut. In the run-up to the meeting, sources said although Russia was advocating for an increase of 137,000 bpd to avoid pressuring prices, Saudi Arabia would have preferred double, triple or even four times that to quickly regain market share.
The modest production update also comes at a time of rising Venezuelan exports, the resumption of Kurdish oil flows via Turkey, and the presence of unsold Middle Eastern barrels for November loading, PVM Oil Associates analyst Tamas Varga said. Saudi Arabia kept unchanged the official selling price for the Arab Light crude it sells to Asia.
While refining sources in Asia surveyed by Reuters had expected a slight increase, those expectations diminished as concerns about rising Middle Eastern crude supply felled the premium to a 22-month low last week. In the near term, some analysts expect the refinery maintenance season starting soon in the Middle East will help cap prices.
The Kirishi oil refinery, one of Russia’s largest, halted its most productive crude unit following a drone attack and subsequent fire on October 4, with its recovery expected to take about a month, two industry sources said on Monday.
Expectations of weak demand fundamentals in the fourth quarter are another factor limiting the market’s upside.
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