Oil prices steady after steep losses in previous session

[HOUSTON] Oil prices held largely steady on Thursday after declining around 4 per cent in the previous session as investors weighed concerns about global oversupply with looming sanctions against Russia’s Lukoil.

Brent crude futures rose 30 cents, or 0.5 per cent, to US$63.01 a barrel. US West Texas Intermediate crude increased 20 cents, or 0.3 per cent, to US$58.69 a barrel, after a decline of 4.2 per cent on Wednesday.

“There should be considerable support to oil prices around US$60/bbl, especially given there could be short-term disruption to Russian export flows once stricter sanctions kick in,” said Suvro Sarkar, DBS Bank’s energy sector team lead.

The US has hit Lukoil with sanctions as part of its efforts to bring the Kremlin to peace talks over Ukraine. The sanctions prohibit transactions with the Russian company after Nov 21.

Price gains were held back as a report from the Energy Information Administration showed a larger-than-expected rise in US crude stocks, while petrol and distillate inventories fell less than expected last week.

Crude inventories rose by 6.4 million barrels to 427.6 million barrels in the week ended Nov 7, the EIA said, compared with analysts’ expectations in a Reuters poll for a 1.96-million-barrel rise.

The American Petroleum Institute said on Wednesday that US crude stockpiles rose by 1.3 million barrels in the week ended Nov 7, according to market sources.

Prices fell more than US$2 a barrel on Wednesday after the Organization of the Petroleum Exporting Countries said global oil supplies would slightly exceed demand in 2026, a further shift from the group’s earlier projections of a deficit.

“Recent (price) weakness seems to be driven by Opec’s revision of supply-demand balance in 2026 in its monthly report, which confirms the group is now acknowledging the possibility of a supply glut in 2026, in contrast to its more bullish stance all along,” DBS’s Sarkar said.

Opec said it expected the supply surplus next year because of wider production increases by Opec+, a group of producers that includes Opec members and allies like Russia.

The International Energy Agency raised its global oil supply growth forecasts for this year and next in its monthly oil market report on Thursday, signaling a bigger surplus in 2026. The US EIA also said in its Short-Term Energy Outlook on Wednesday that US oil production is expected to set a larger record this year than previously forecast.

Global oil inventories will grow through 2026 as production increases faster than demand for petroleum fuels, adding to pressure on oil prices, the EIA added.

The US government is due to lumber back to life on Thursday after the longest shutdown in US history snarled air traffic, cut food assistance to low-income Americans and forced more than 1 million workers to go unpaid for more than a month.

“The return of the government is going to help support demand in the near term. We should be looking for better demand from those returning to work, holiday travel expectations back on track and of course, holiday shopping season ready to kick off,” said Carl Larry, a manager of sales for trading and risk at Enverus. REUTERS