Oil Steadies as OPEC+ Signals Caution With Modest Output Hike
Oil steadied as traders weighed an OPEC+ decision to raise production at a modest against Saudi Aramco’s reduction in selling prices of its crude to Asia.
West Texas Intermediate crude edged up 0.6% to settle above $62 a barrel after losing more than 3% last week, when it became apparent that an output hike was on the way. The Organization of the Petroleum Exporting Countries and its partners decided to add 137,000 barrels a day in October, a smaller increment than they’d scheduled for the previous two months, leading investors to roll back bearish positioning.
But crude pared earlier gains after Saudi Arabia on Monday cut pricing of its flagship grade for its main market in Asia next month, in a sign that the de facto cartel leader sees demand worsening.
“The market priced in the hike last week and is now focused on whether we start to see inventory builds and what reduced spare capacity could mean going forward,” said Rebecca Babin, a senior energy trader at CIBC Private Wealth Group. “This looks like more of a relief rally — one that may stave off the bearish narrative briefly, but probably only for a day or two.”
The OPEC+ hike marks the reversal of cuts that were set to remain in place until the end of 2026 — following the rapid return of a previous tranche of idled barrels over recent months — as the alliance seeks to reclaim market share. Still, the actual volume is widely expected to be lower than announced, as some members of the group face pressure to forgo their share of increases to compensate for previous hikes, while others lack spare capacity.
Prices
WTI for October delivery advanced 0.6% to settle at $62.26 a barrel in New York.
Brent for November settlement rose 0.8% to settle at $66.02 a barrel.
Source: Bloomberg
