Oil extends gains on lower output hike by Opec+

Bengaluru/Singapore — Oil prices extended gains on Tuesday as a smaller-than-expected November output hike by Opec+ helped to ease some fears of a growing supply glut.

Brent crude futures advanced 23c, or 0.35%, to $65.70 a barrel by 3.56am GMT. US West Texas Intermediate crude climbed 21c, or 0.34%, to $61.90.

Both contracts settled more than 1% higher in the previous session after Opec+ decided to increase its collective oil production by 137,000 barrels per day starting in November.

The move was in contrast to market expectations for a more aggressive reintroduction of supply, a sign that the group remains cautious about increasing its production share in the global oil market amid predictions of a supply surplus in the fourth quarter as well as next year, said ING analysts.

“Brent had fallen by about $5 per barrel last week in response to earlier expectations of a larger supply boost, so this mild rebound seems reasonable,” said Anh Pham, a senior analyst at LSEG.

“For now, the market still appears capable of accommodating the extra volume, and we have yet to see a shift into contango at the front of the curve,” he added.

Opec+ has increased its oil output targets by more than 2.7-million bpd this year, equating to about 2.5% of global demand.

Geopolitical factors have kept a floor under prices, with conflict between Russia and Ukraine affecting energy assets and creating uncertainty over Russian crude supply.

Russia’s Kirishi oil refinery halted its most productive distillation unit, CDU-6, following a drone attack and subsequent fire on October 4, with its recovery likely to take about a month, two industry sources said on Monday.

Still, oil prices have come under pressure amid output increases from both Opec+ and non-Opec+ producers. Moreover, any slowdown in demand due to weak economic growth triggered by US trade tariffs is likely to exacerbate the surplus, analysts said.

Reuters