Oil prices saw an increase on Thursday, recovering from three previous sessions of losses.
This rise was attributed to the potential for stricter sanctions on Russian crude, which offset ongoing market concerns about oversupply.
According to experts, prices are expected to remain in a range for the next few sessions ahead of the OPEC+ meeting over the weekend.
Analysts pointed to a technical rebound as the reason for the price increases. This followed a roughly 1% loss in the previous session for both Brent and WTI crude, with Brent reaching its lowest close since June 5 and West Texas Intermediate since May 30.
Geopolitical tensions
Lallalit Srijandorn, editor at FXstreet, said in a report:
Escalating geopolitical tensions and talk of stricter sanctions on Russian crude provide some support to the WTI price.
The Wall Street Journal reported on Wednesday that the US plans to supply Ukraine with intelligence to aid long-range missile strikes against Russian energy infrastructure.
US President Donald Trump has approved this action, and US officials are encouraging NATO allies to follow suit.
According to the WSJ, this move would facilitate Ukraine’s ability to target refineries, pipelines, and other infrastructure, thereby aiming to cut off the Kremlin’s revenue and oil supply.
Additionally, G7 Finance Ministers announced on Wednesday their commitment to escalate pressure on Russia.
This will involve targeting nations that increase their purchases of Russian oil, as well as entities facilitating the circumvention of existing restrictions.
Traders noted that demand from China, the world’s largest crude oil importer, contributed to the underpinning of oil prices through stockpiling, thereby mitigating potential declines.
Fears of a global economic slowdown, exacerbated by a US government shutdown, combined with anticipated increased output from the Organization of the Petroleum Exporting Countries and allied producers, negatively impacted market sentiment and limited oil price increases.
The Trump administration has frozen $26 billion in funds intended for Democratic-leaning states. This action, taken during the government shutdown, fulfills a previous threat to target Democratic priorities.
Supply
According to media reports earlier this week, OPEC+ might increase oil production by as much as 500,000 barrels per day in November.
This potential increase, triple the October adjustment, suggests Saudi Arabia’s intent to regain market share.
The supply increase is likely to coincide with decline in demand patterns in the US and Asia.
On Wednesday, the Energy Information Administration reported a rise in US crude oil, gasoline, and distillate inventories last week due to a decrease in refining activity and demand.
Crude inventories increased by 1.8 million barrels, reaching 416.5 million barrels in the week ending September 26. This exceeded expectations from a Reuters poll, which predicted a 1 million-barrel rise.
Technical outlook
“Nonetheless, the potential upside for the WTI price might be limited due to expectations of increased supply from the OPEC+ production hike scheduled for next month,” Srijandorn said.
“A bigger-than-expected increase in US crude inventories last week might also weigh on the black gold.
News of additional supply emerged following an agreement between Iraq and the Kurdistan region to reopen a pipeline through Turkey.
This will allow approximately 200,000 barrels per day of crude oil to be exported, according to Trade Nation’s senior market analyst David Morrison.
Morrison added:
Front-month WTI is now testing a significant band of support around $62-$61.70.
At the time of writing, the WTI crude price was at $62.04 per barrel, while Brent was $65.64 per barrel, both up 0.4% from the previous close.
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