New Delhi — Oil prices steadied on Wednesday after two days of declines as investors weighed Opec+ plans for a larger output hike next month and the outcome of a US government shutdown that could affect economic activity and fuel demand.
Brent crude futures for December delivery rose 28c to $66.31 a barrel by 5am GMT. US West Texas Intermediate (WTI) crude rose by 26c to $62.63 a barrel.
On Monday, Brent and WTI both settled more than 3% lower, their sharpest daily declines since August 1. On Tuesday, they each fell 1.5% further.
“The weakness stems largely from supply-side developments, with Opec gradually reviving production ... adding to market concerns over a potential supply overhang,” Sugandha Sachdeva, founder of SS WealthStreet, a New Delhi-based research firm, said.
Oil cartel Opec and its allies, known as Opec+, could agree to raise oil production by up to 500,000 barrels a day (bbl/day) in November, triple the increase made for October, as Saudi Arabia sought to reclaim market share, three sources familiar with the talks said.
Eight members of the group, which pumps about half the world’s oil, were considering a hike of 274,000bbl/day-411,000bbl/day, two of the sources said. A third source said the increase could reach 500,0000bbl/day.
Opec wrote in a post on X that media reports of plans to raise output by 500,0000bbl/day were misleading.
Additional pressure on prices followed an industry report showing US crude stockpiles fell while petrol and distillate inventories rose last week.
Crude stocks fell by 3.67-million barrels in the week ended September 26, according to market sources citing American Petroleum Institute estimates on Tuesday.
Petrol inventories, however, rose by 1.3-million barrels while distillate inventories increased by 3-million barrels from last week, the sources said.
“While US crude inventories have been on a declining trend, the pace of drawdowns has slowed, tempering bullish sentiment,” SS WealthStreet’s Sachdeva said.
The US government shut down much of its operations on Wednesday as deep partisan divisions prevented Congress and the White House from reaching a funding deal.
Agencies warned that the 15th government shutdown since 1981 would halt the release of a closely watched September employment report, slow air travel, suspend scientific research, withhold pay from US troops and lead to the furlough of 750,000 federal workers at a daily cost of $400m.
Data on factory activity in Asia, the world’s biggest oil-consuming region, also added to concerns about fuel demand.
Manufacturing activity contracted across most major economies in September, surveys showed on Wednesday, as weak Chinese demand, softer US growth and looming US tariffs piled pressure on the region.
Reuters
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