Oil prices ticked higher on Wednesday, shrugging off market jitters over potential oversupply after the OPEC+ alliance decided to take a cautious approach to production increases next month.
By early Asian trade, Brent crude futures climbed 48 cents, or 0.7 per cent, to $65.93 per barrel, while US West Texas Intermediate (WTI) gained 51 cents, or 0.8 per cent, to $62.24, reported Reuters.
Both benchmarks ended Tuesday’s session little changed, as traders tried to make sense of mixed cues from the global oil market.
OPEC+ Turns the Tap Gently
Notably, the Organisation of the Petroleum Exporting Countries (OPEC) and its allies, collectively known as OPEC+, agreed to raise output by just 137,000 barrels per day for November. The modest increase was the smallest of several options discussed during weekend deliberations.
The restrained output plan helped temper fears that a rapid ramp-up could flood the market. As Emril Jamil, Senior Analyst at LSEG Oil Research, explained, “The market is in price limbo, with one side bent towards a possible supply glut and the other believing the ramp-up will not be as fast as anticipated.”
According to Jamil, some traders are holding long positions, betting on further price gains, driven by the expectation that global producers will continue working to restrict Russian crude flows.
Market Balancing Act Continues
Analysts at ANZ noted that despite the rise in prices, gains remain capped. “Until the physical market shows signs of softening via rising inventories, investors are likely to discount the impact of the production increases,” they wrote.
The ANZ report also pointed out that concerns about Russian supply disruption have eased, as crude exports have stayed near a 16-month high over the past four weeks.
Meanwhile, attention now turns to US inventory data from the Energy Information Administration (EIA), due later on Wednesday. Preliminary figures from the American Petroleum Institute (API) indicated a 2.78 million-barrel rise in US crude stocks during the week ending October 3, though gasoline and distillate inventories fell.
Adding to the intrigue, the EIA revealed that US oil production is set to reach a new record high this year, outpacing earlier expectations. The prospect of stronger American output could weigh on future prices, even as OPEC+ continues to fine-tune its supply strategy.
