Oil settles lower as Opec plans to increase oil output
Eight Opec+ nations are leaning towards making another modest increase in oil output for December
[HOUSTON] Oil prices settled marginally lower on Monday (Oct 27) as Organization of the Petroleum Exporting Countries’ (Opec) plans to increase oil output once again outweighed hopes of a trade deal framework between the US and China and renewed US sanctions on Russia.
Brent crude futures were down about 32 US cents, or nearly 0.5 per cent, at US$65.62 a barrel, while US West Texas Intermediate crude futures closed 19 US cents or 0.3 per cent lower at US$61.31. Both contracts fell around 1 per cent in early trade.
Eight Opec+ nations are leaning towards making another modest increase in oil output for December when they meet on Sunday as Saudi Arabia pushes to reclaim market share, four sources familiar with the talks said.
US President Donald Trump and his Chinese counterpart Xi Jinping are due to meet on Thursday to decide on that could pause tougher US tariffs and China’s rare-earth export curbs, easing market jitters around a trade war.
US Treasury Secretary Scott Bessent said on Sunday that US and Chinese officials had hashed out a “substantial framework” for a trade deal that could avoid 100 per cent US tariffs on Chinese goods and achieve a deferral of China’s rare-earth export controls in trade discussions this week.
“Crude futures are taking a breather from last week’s steep rally as President Trump is meeting with Chinese President Xi and staff for trade negotiations on Thursday to hopefully finalise most differences,” said Dennis Kissler, senior vice-president of trading at BOK Financial.
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The United States hit Russia’s major oil companies with sanctions on Wednesday, which could hurt Russia’s oil exports if enforced and be a positive for crude prices, Kissler added.
“While the futures market has added in additional trade with China and less crude exports from Russia, traders remain cautious as to how much this will actually affect global supplies,” Kissler said.
Demand concerns also weigh on oil
Concerns over lacklustre demand have weighed on the market, with Brent falling to its lowest since May earlier this month, but renewed sanctions on Russia from the US, along with stronger-than-expected US demand, have helped buoy prices.
“The hope for bulls is that US consumption continues to recover, otherwise, it seems the drift lower seen so far today is likely to intensify,” said Chris Beauchamp, chief market analyst at IG Bank.
Opec and its allies have changed course this year by reversing previous production cuts to regain market share, helping in part to keep a lid on oil prices. Iraq, the Opec group’s biggest overproducer, was in negotiations over the size of its quota within its available capacity of 5.5 million barrels per day, oil minister Hayan Abdel-Ghani said at an oil conference on Monday. The fire at Iraq’s Zubair oilfield on Sunday did not impact exports from the country, he added. Last week, Brent and WTI rose 8.9 per cent and 7.7 per cent, respectively, on US and EU sanctions on Russia.
“There are likely some continued challenges for Russian oil to enter the market, but it depends on how sanctions will be enforced,” said Rystad analyst Janiv Shah. REUTERS
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