Oil stable as investors balance oversupply worries with sanctions risks
Oil prices were stable on Tuesday, as oversupply concerns balanced uncertainty over the impact of the latest U.S. sanctions on Russian oil.
Brent crude futures rose 27 cents, or 0.42%, to $64.33 a barrel by 0922 GMT. U.S. West Texas Intermediate crude was at $60.39 a barrel, up 26 cents, or 0.43%.
Investors continue to assess the fallout of the U.S. sanctions on Russia, and their impact on both crude oil and refined fuel markets.
Lukoil declared force majeure at an Iraqi oil field it operates, sources told Reuters on Monday, marking the biggest fallout yet from the sanctions imposed last month.
Restricted fuel exports as a result of the sanctions are propping up oil prices in the face of a crude oil glut, PVM analyst Tamas Varga said.
"Fresh U.S. sanctions on major Russian oil producers and exporters are weighing on product exports. As a result, heating oil/gasoil and RBOB gasoline are moving in a different direction from crude," he said.
European diesel refining margins are around 21-month highs of close to $31 per barrel, while European gasoline profit margins are at their highest in 18 months of almost $21 per barrel.
Worries about crude oversupply are keeping a lid on oil prices.
"As OPEC production increases grind on, global oil balances are acquiring an increasingly bearish hue on the supply side of the ledger with demand still trending lower in conjunction with a slowed economic growth path among major oil-consuming countries," analysts at energy advisory firm Ritterbusch and Associates said in a note.
Earlier this month, OPEC+ agreed to increase December output targets by 137,000 barrels per day, but also agreed to a pause in increases in the first quarter of next year.
Additionally, the volume of oil stored onboard ships in Asian waters doubled in recent weeks after tightening Western sanctions hit exports to China and India, analysts said.
Otherwise, wider markets saw support as the longest government shutdown in U.S. history could end this week after the Senate approved a compromise that would restore federal funding.
Source : Reuters.com
