When oil prices go slightly uphill, there is always a reason for a short respite. As the prices rose a little higher on Thursday, it was a sign of recovering a fraction of their steep recent losses for traders. For quite some time, they had been bearing the losses due to the risk of fresh disruptions to Russian crude supplies against signs of weakening demand.
Among the top names, Brent crude futures edged up 0.2% to $65.49 a barrel, while U.S. West Texas Intermediate (WTI) climbed 0.2% to $61.92. The lift was modest, with analysts attributing it to the effect of geopolitics.
Sources at Nissan Securities noted that WTI’s dip toward $60 a barrel, a key support zone, sparked some bargain buying. That uptick, they say, was further fuelled by speculation that the U.S. and its G7 allies may tighten sanctions. An oil analyst at UBS said that markets are jittery and that Russian oil could face new disruptions, but without actual sanctions bites or export blockages, the price increase is limited.
The G7 finance ministers this week pledged to crack down harder on nations still importing Russian crude or enabling backdoor flows, while Washington is reported to be aiding Ukraine with intelligence to help strike Russian oil infrastructure. Both shifts, if realized, could hit Russian supply lines directly.
But the bullish sentiment ran into headwinds. OPEC+ is said to be mulling a sharp production hike in November that could go up to 500,000 barrels a day, three times its October increase, as Saudi Arabia seeks to claw back lost market share. Adding to that, U.S. government stock data showed oil product inventories rising by 1.8 million barrels last week to 416.5 million, a clear sign of soft demand and weak refinery runs.
The result is a market trapped in two stories at once. While the fears over Russian supply squeezes are pushing prices up, the weight of oversupply and sluggish demand is holding them back. For now, the tug of war has left oil in a fragile balance, with traders watching closely which side tips first.
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