WASHINGTON (dpa-AFX) - Crude oil surged on Wednesday, extending gains from past two sessions, as Sunday's decision by the OPEC+ alliance to effect only a modest hike in November production continued to provide carryover support for the prices. However, reports from Iraq on new large-scale production capped the gains.
WTI Crude Oil for November delivery was last seen trading up by $0.89 (or 1.44%) at $62.62 per barrel.
Last week, investors were spooked by reports indicating that OPEC+ was set to increase output by 500,000 barrels per day in November.
However, much to their relief, after a virtual meeting on Sunday, the group announced their decision to raise output targets for November by 137,000 barrels per day. The increase being far less than what traders feared has supported oil prices on the upside throughout this week.
Data released by the American Petroleum Institute today revealed that U.S. crude stocks rose by 2.78 million barrels for the week ending October 3 following a 3.674 million barrel draw in the previous week.
Data released by the U.S. Energy Information Administration today was mixed.
For the week ending October 3, crude oil stocks rose by 3.715 million barrels. However, gasoline stocks declined by 1.6 million barrels, distillate stocks decreased to 2.0 million barrels, and heating oil stocks fell by 60,000 barrels.
For the week ending October 3, net crude imports rose by 731,000 barrels per day.
For the same period, crude oil stocks at the Cushing, Oklahoma, delivery hub fell by 763,000 barrels.
Lower holdings of refined oil products indicate stronger demand.
Recently, under pressure from the U.S., Iraq began resuming crude oil exports to Turkey from the semi-autonomous Kurdistan region. The arrangement is now expected to eventually return up to 230,000 barrels per day to international markets.
In a related development, U.S. oil major Exxon Mobil has signed an agreement with Iraq to help it develop its giant Majnoon oilfield and expand oil exports.
In the ongoing Russia-Ukraine war, both countries are targeting each other's oil facilities and refineries. Reportedly, in both August and September, Russia's Volgograd refinery was hit twice; the Novokuibyshev refinery was hit thrice; and the Ryazan, Saratov and Salavat refineries have been hit twice each. Some news outlets report that Russia has lost 38% of its oil refining capacity.
Reduced crude production in Russia is supportive for oil prices.
In an effort to end the Israel-Palestine conflict, U.S. President Donald Trump proposed a peace plan that requires Palestinian Hamas militant group to disarm. Both sides are engaged in negotiations at Egypt's Red Sea resort of Sharm El-Sheikh with Egypt, Qatar, and the U.S. acting as intermediaries.
An end to the decades-long conflict could usher in a new secure era for oil and energy trade.
In the U.S., the government shutdown entered its eighth day today.
With all non-essential services coming to a halt, the release of key economic data that investors and the U.S. Federal Reserve rely upon to gauge the economy are now halted. Despite the absence of data, markets are pricing in a 25-basis-point Fed rate cut in October.
As oil is a dollar-denominated commodity, oil prices could swing back and forth following the alterations in the Greenback which stands to be impacted by the Fed's next decision.
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