Yahoo Finance UK’s Pedro Goncalves writes:
Oil prices rose in early European trading on Monday, buoyed by expectations of tighter supplies after the Opec+ alliance opted for a more cautious increase in production next month.
Brent (BZ=F) crude futures jumped 1.6% to trade at $66.57 per barrel at the time of writing, while West Texas Intermediate (CL=F) futures climbed by 1.7% to $62.92 a barrel.
The Organisation of the Petroleum Exporting Countries and its allies, known collectively as Opec+, agreed on Sunday to raise production by 137,000 barrels per day in October, a smaller increase than the group had implemented in previous months. Earlier this year, monthly output hikes reached as high as 555,000 and 411,000 barrels per day.
“The oil market was supported by relief over Opec+’s modest output hike and a technical bounce following last week’s decline,” Toshitaka Tazawa, an analyst at Fujitomi Securities, told Reuters, adding the Opec+ output hike had been priced in since last week.
“Expectations of tighter supply from potential new US sanctions on Russia are also lending support,” he said.
US president Donald Trump said on Sunday that he is prepared to move to a second phase of sanctioning Russia, his clearest indication yet that the administration is considering tougher action against Moscow or its oil buyers in response to the ongoing war in Ukraine.
“Buying emerged as the Opec+ output increase was smaller than anticipated, while fading prospects for peace in the Russia-Ukraine war and views that Russian oil won’t flood the market also supported prices,” said Satoru Yoshida, a commodity analyst with Rakuten Securities.