Oil prices jump 1.5% after lower-than-expected OPEC+ output hike
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Oil prices jump 1.5% after lower-than-expected OPEC+ output hike

by Inkhabar webdesk
Oil prices jump 1.5% after lower-than-expected OPEC+ output hike

By Emily Chow and Trixie Yap SINGAPORE (Reuters) -Oil prices rose around 1.5% on Monday after OPEC+ announced a more modest monthly increase in production than expected, tempering some concerns about supply additions, though analysts expect near-term gains to be capped by a soft demand outlook. Brent crude futures rose 91 cents, or 1.4%, to $65.44 a barrel by 0315 GMT, while U.S. West Texas Intermediate crude was at $61.77, up 89 cents, or 1.5%. "The price jump has primarily been boosted by OPEC+'s decision for a lower-than-expected production hike next month as the group intended to buffer the recent slump in oil markets," said independent analyst Tina Teng. On Sunday, the Organization of the Petroleum Exporting Countries plus Russia and some smaller producers said it would raise production from November by 137,000 barrels per day (bpd), the same modest monthly increase as in October, amid persistent concerns over a looming supply glut. In the run-up to the meeting, sources said Russia was advocating for an output increase of 137,000 bpd to avoid pressuring prices, but Saudi Arabia would have preferred double, triple or even quadruple that figure to regain market share more quickly. "OPEC+'s decision to increase production by another 137,000 bpd in November could be manageable in light of rising supply disruptions due to tightening sanctions by the U.S. and Europe against Russia and Iran," ANZ analysts said in a note on Monday. "Meanwhile, Ukraine continued to intensify its attacks on Russian energy facilities, targeting the Kirishi refinery, one of Russia's largest refineries, with an annual processing capacity exceeding 20 million tonnes," the analysts added. The Group of Seven nations' finance ministers said last week they would take steps to increase pressure on Russia by targeting those who are continuing to increase purchases of Russian oil and facilitating circumvention of sanctions, as part of efforts to cut off Russian revenues due to Moscow's invasion of Ukraine. However, analysts expect weak demand fundamentals in the fourth quarter to cap near-term price gains. "With the absence of any fresh bullish catalysts and growing ambiguity on the demand outlook, oil prices are likely to stay capped despite OPEC+’s smaller-than-feared output hike," said Priyanka Sachdeva, senior market analyst at Phillip Nova. "The reality is that the market is gradually shifting toward a phase of oversupply, with seasonal demand expected to taper off into winter and macro data offering little upside impulse," she added. The refinery maintenance season globally, mostly starting this month, is likely to weigh on demand. [REF/OUT] "As the shoulder season progresses… a ramp-up in refinery maintenance should create a significant surplus, spurring a selloff in oil," BMI analysts said in a client note. (Reporting by Emily Chow; Editing by Jamie Freed & Shri Navaratnam)

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