Oil prices increased on Thursday, breaking a three-day decline and recovering from 16-week lows due to anticipated tighter sanctions on Russian crude. However, expectations of increased supply from an OPEC+ output boost next month limited the extent of the gains. Brent crude futures increased by 15 cents, representing a 0.2% rise, reaching $65.50 per barrel as of 0116. U.S. West Texas Intermediate crude experienced an increase of 14 cents, representing a 0.2% rise, reaching a price of $61.92 per barrel.
On Wednesday, both Brent and WTI experienced a decline of approximately 1%, with Brent reaching its lowest closing price since June 5 and WTI since May 30. “Buying interest emerged as WTI neared its $60 support level, while heightened geopolitical risks and speculation about tighter sanctions on Russian crude also lent support,” stated Hiroyuki Kikukawa. The finance ministers of the Group of Seven nations announced on Wednesday their intention to intensify pressure on Russia by focusing on entities that persist in augmenting their acquisitions of Russian oil, as well as those aiding in the circumvention of sanctions. Additionally, the United States is set to furnish Ukraine with intelligence to facilitate long-range missile strikes targeting Russian energy infrastructure, as per reports. Reports says that this development will facilitate Ukraine’s ability to target refineries, pipelines, and other critical infrastructure, with the objective of undermining the Kremlin’s revenue and oil supply.
Nonetheless, concerns regarding the global economy were heightened by the prospect of a U.S. government shutdown, while anticipations of increased production from OPEC+, comprising the Organization of the Petroleum Exporting Countries and its allied producers, dampened sentiment and constrained price increases. The administration of U.S. President Donald Trump enacted a freeze on $26 billion intended for Democratic-leaning states on Wednesday, fulfilling a prior commitment to leverage the government shutdown as a means to challenge Democratic priorities. On the supply side, OPEC+ may reach a consensus to increase oil production by as much as 500,000 bpd in November, a figure that would be three times the increment established for October, as Saudi Arabia aims to regain market share, according to three sources acquainted with the discussions.
This development would occur concurrently with a decrease in demand from both the U.S. and Asian markets. The Energy Information Administration reported on Wednesday that U.S. crude oil, gasoline, and distillate inventories increased last week, attributed to a decline in refining activity and demand. Crude inventories increased by 1.8 million barrels to 416.5 million barrels in the week ending September 26, surpassing the expectations of a 1 million-barrel rise as indicated in a Reuters poll.