Crude Oil Rises; Strong Tone Continues After OPEC+ Decision

By Peter Nurse

Oil prices increased again on Tuesday, building on gains from the previous day after major oil-producing nations opted not to boost production beyond their previously announced plans. This decision comes amid a recovering demand following the pandemic’s impact.

By 9 AM ET, West Texas Intermediate (WTI) futures rose by 1.6% to reach $78.80 a barrel, while Brent futures increased by 1.7% to trade at $82.62 a barrel. Both contracts had seen a rise of over 2% on Monday, with WTI touching a seven-year high and Brent achieving a three-year peak.

U.S. gasoline RBOB futures also experienced a 1.7% increase, pricing at $2.3481 per gallon.

The Organization of the Petroleum Exporting Countries (OPEC) and its allies, including Russia—collectively known as OPEC+—decided to maintain their plan to increase output by 400,000 barrels per day each month until at least April 2022. This strategy is aimed at phasing out 5.8 million barrels per day of existing production cuts.

Despite pressure from major oil consumers such as the United States and India to raise outputs, OPEC+ expressed concerns over a potential fourth global wave of Covid-19 infections that could hamper the recovery in demand. Recent data revealed a notable decline in global Covid cases, reaching their lowest level in nearly two months.

Analysts from ING noted that one rationale behind OPEC+’s steady approach may be that crude oil prices have not risen significantly compared to other energy sources like natural gas or coal, suggesting limited demand spillover from those markets to crude oil.

The focus now shifts to upcoming U.S. crude stockpile data, which is set to be released later in the day. The industry-funded group reported a slight increase of over 4 million barrels in U.S. crude oil inventories for the week ending September 24, marking the first weekly decline in two months.