Oil rises 1.5% after modest OPEC+ output hike

Brent crude futures gained 91 cents, or 1.4%, to $65.44 a barrel

Oil prices rose almost 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 gained 91 cents, or 1.4%, to $65.44 a barrel by 0315 GMT.

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 other 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.

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.