SINGAPORE: Oil prices inched higher on Monday after OPEC+ surprised markets with a smaller increase in production than expected. The decision helped ease some worries of oversupply, though analysts warned that sluggish demand could limit any lasting gains.
By 0315 GMT, Brent crude futures had risen 91 cents, or 1.4 percent, to $65.44 a barrel. US West Texas Intermediate (WTI) crude was up 89 cents, or 1.5 percent, trading at $61.77 a barrel.
OPEC+ decision lifts prices
Independent analyst Tina Teng said the rebound was mainly driven by OPEC+ choosing a modest hike in output for next month, instead of the larger rise that traders had anticipated. The move, she noted, was an attempt to stabilise prices after recent declines.
Adding to the market’s volatility, Ukraine intensified its strikes on Russian energy sites, including the Kirishi refinery. The facility is one of Russia’s largest, with an annual processing capacity of more than 20 million tonnes.
Western allies tighten pressure on Moscow
Last week, finance ministers from the Group of Seven (G7) nations pledged to clamp down on buyers helping Russia skirt sanctions by continuing to purchase its oil. The step is part of ongoing efforts to cut off Moscow’s revenues as the war in Ukraine drags on.
Weak demand clouds outlook
Despite Monday’s price bounce, several analysts believe the upside will be short-lived. Priyanka Sachdeva, senior market analyst at Phillip Nova, said the lack of new bullish drivers and an uncertain demand picture will likely keep oil prices capped.
“The market is moving toward oversupply as seasonal demand tapers off into winter and macroeconomic data gives little reason for optimism,” she explained.
Global refinery maintenance, which typically picks up during this time of year, is also expected to add pressure. Analysts at BMI warned that as the so-called shoulder season progresses, refinery shutdowns could trigger a significant surplus and spark a selloff in crude.