Oil prices increased by about 1.5% after OPEC+ announced a smaller than anticipated monthly production increase. However, analysts predict that weak demand expectations will limit any near-term price growth.
OPEC+ Production Decisions Impact Prices
Brent crude futures rose by 91 cents to $65.44 a barrel, while U.S. West Texas Intermediate crude increased by 89 cents to $61.77. The price rise is attributed to OPEC+’s modest decision to increase production by 137,000 barrels per day (bpd) for November, matching October’s increase.
Before the meeting, Russia supported this output increase to avoid lessening prices, while Saudi Arabia preferred a larger hike. Experts from ANZ noted that this production increase is manageable amid U.S. and European sanctions against Russia and Iran.
Weak Demand Forecasts Limit Gains
Analysts warn of weak demand in the fourth quarter, which is expected to limit immediate price increases. Priyanka Sachdeva from Phillip Nova stated that the absence of strong market drivers may keep oil prices capped despite OPEC+’s smaller-than-anticipated hike.
As the season progresses, refinery maintenance will likely add to the decrease in demand. BMI analysts indicated that maintenance seasons may create a significant surplus in the market.
Ongoing Global Tensions Affect Oil Market
Ukraine’s intensified attacks on Russian energy facilities add complexity to the situation, affecting supply. The Group of Seven finance ministers revealed plans last week to pressure Russia by targeting buyers of its oil.
Despite geopolitical tensions, analysts believe the market is heading toward oversupply, with demand expected to decline during the winter months.
