Oil prices stabilised as traders assessed OPEC+’s decision to modestly increase production alongside Saudi Aramco’s reduction in crude selling prices to Asia. West Texas Intermediate (WTI) crude rose 0.6 per cent, settling above $US62 a barrel in New York, following a 3 per cent drop last week when the output hike became apparent.
The Organisation of the Petroleum Exporting Countries (OPEC) and its allies have agreed to add 137,000 barrels per day in October. This increment is smaller than the increases scheduled for the previous two months, prompting investors to scale back bearish positions. However, earlier gains were tempered after Saudi Arabia cut the price of its flagship crude grade for Asian markets next month, indicating concerns about weakening demand.
According to Rebecca Babin, a senior energy trader at CIBC Private Wealth Group, the market had already factored in the output hike. The focus is now shifting to potential inventory builds and the implications of reduced spare capacity. Babin characterised the price movement as a relief rally, suggesting it might only briefly counter the bearish outlook.
The OPEC+ increase marks a reversal of cuts initially set to remain until the end of 2026, as the alliance aims to regain market share. The actual increase in volume is anticipated to be lower than announced, with some members facing pressure to forgo their share of increases to compensate for prior hikes, while others lack spare capacity.
