WASHINGTON (dpa-AFX) - Crude oil surged on Monday as the volume of output increase for November by the OPEC+ alliance, which they announced yesterday after their virtual meeting, turned out to be lower-than-expected and relieved traders' concerns of oversupply.
WTI Crude Oil for November delivery was last seen trading up by $0.73 (or 1.20%) at $61.61 per barrel.
After the virtual meeting on October 5, the OPEC+ alliance announced its collective decision to rise oil output by 137,000 barrels per day as a part of the group's plans to buffer its recent slump in oil markets. Sunday's decision is in line with a similar consensual increase for October.
However, yesterday's quantum of hike by the OPEC+ member-nations is lesser than what traders were expecting, and in a way, erased fears of a larger supply boost.
First introduced in April 2023, with a voluntary additional production increase of 1.65 million bpd, the plans to hike output have been extended up to 2026.
The cartel is meeting again on November 2 to decide on their further course of action.
The most recent U.S. Energy Information Administration's data revealed that for the week ending September 26, crude oil stocks rose by 1.79 million barrels - higher than expected - giving rise to concerns of cooling demand.
The report had also shown a marked increase in gasoline stocks by 4,125,000 barrels, distillate stocks by 578,000 barrels, and heating oil stocks by 187,000 barrels.
Traders feel that the soft outlook for crude oil is likely to cap near-term gains.
The U.S. government shutdown has entered its sixth day today.
Key macroeconomic data essential for both the U.S. Federal Reserve and the markets to gain insights on the economy are now rendered unavailable.
The ongoing Russia-Ukraine war has intensified with both sides attacking each other strategically.
Recently, Ukraine confirmed a major drone strike on Russia's largest oil refinery in the Kirishi, Leningrad region. The Kirishi refining facility produces about 6.6% of Russia's refined oil.
Just a week before, Ukraine damaged a big oil export terminal at Novorossiysk on the Black Sea, a refinery complex in Bashkortostan (over 1,300 km from Ukraine), and a pumping station in Chuvashia, 1,000 km away.
In September alone, Ukraine has attacked 19 oil facilities across Russia and Russia-occupied territories of Ukraine.
So far, the U.S. has not responded to Ukraine's request for Tomahawk missiles. Traders feel that if an intervention by the the U.S. happens, it could provoke Russia and such an escalation could eventually disrupt Russian oil supply.
In the Middle East, as a part of the Gaza Peace Plan proposed by U.S. President Donald Trump, delegations from Hamas and Israel, together with mediators, have convened in Egypt for negotiation to end the war. Trump has urged both sides to 'move fast' and avoid any further bloodshed. A peace deal in the gulf could pave way for a secure and streamlined oil and energy transit.
In the U.S., the partial closure of the government seems likely to go on. Traders are worried about the long-term effects of the closure as it could weaken energy demand and weigh on oil prices.
Despite last Friday's monthly job report and upcoming economic data rendered unavailable due to the shutdown, markets are pricing in a 94.6% chance of a 25-basis-point rate cut by the U.S. Federal Reserve in its upcoming October 28-29 meeting.
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