Oil pauses as markets assess OPEC+ plans, demand concerns

By Seher Dareen LONDON (Reuters) -Oil prices steadied on Wednesday after falling for two days as investors weighed OPEC+ plans for a larger output hike next month while data from the U.S. and Asia showed signs of demand waning. Brent crude futures for December delivery were down 4 cents to $65.99 a barrel by 1037 GMT. U.S. West Texas Intermediate crude fell 5 cents to $62.32 a barrel. Both contracts headed 1% lower earlier in the volatile trading session. On Monday, Brent and WTI both settled more than 3% lower, their sharpest daily declines since August 1. On Tuesday, they each fell 1.5% further. Oil has dropped on the market anticipating a similar size OPEC+ production increase in November and U.S. and Asian demand starting to fall, Rystad analyst Janiv Shah said. "U.S. drawdowns have slowed, so some bullish movement could start to flip," he added. The Organization of the Petroleum Exporting Countries and its allies, known as OPEC+, could agree to raise oil production by up to 500,000 barrels per day (bpd) in November, triple the increase made for October, as Saudi Arabia seeks to reclaim market share, three sources familiar with the talks said. However, OPEC wrote in a post on X that media reports of plans to raise output by 500,000 bpd were misleading. Meanwhile in the U.S., an industry report showed U.S. crude stockpiles fell while gasoline and distillate inventories rose in the week ended September 26, according to market sources citing American Petroleum Institute estimates on Tuesday. Data on factory activity in Asia, the world's biggest oil-consuming region, also added to concerns about fuel demand, as manufacturing activity contracted across most major economies in September. In addition, record U.S. oil production, some caution ahead of the OPEC+ meeting this weekend and a risk off environment due to the U.S. shutdown also played a part, Giovanni Staunovo, an analyst at UBS said. The U.S. government shut down much of its operations on Wednesday as deep partisan divisions prevented Congress and the White House from reaching a funding deal – which government agencies have warned would halt the release of a closely watched September employment report, amongst other things. Focus was also shifting to the supply and export disruption in Russia due to continuous and successful Ukrainian assaults, PVM Oil Associates' analyst Tamas Varga said. (Reporting by Seher Dareen in London, Mohi Narayan in New Delhi; Editing by Christian Schmollinger, Jacqueline Wong, Alexandra Hudson)

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