Oil prices fell on Tuesday, as investors interpreted OPEC+'s decision to pause production growth in the first quarter as a signal of oversupply in the market, UNN reports with reference to Reuters.
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Brent crude futures fell 15 cents, or 0.2%, to $64.74 a barrel by 04:05 GMT (06:05 Kyiv time). U.S. West Texas Intermediate crude fell 14 cents, or 0.2%, to $60.91 a barrel.
On Sunday, the Organization of the Petroleum Exporting Countries and its allies (OPEC+) agreed to a small increase in oil production in December and a halt to growth in the first quarter of next year.
Since April, OPEC+ has raised its production targets by approximately 2.9 million barrels per day, which accounts for about 2.7% of global supply, but has slowed the pace of growth since October amid forecasts of oversupply.
"(The market) may take this as the first sign of an awareness of potential oversupply from OPEC+ countries, which until now have remained highly optimistic about demand and the market's ability to absorb additional barrels," said Suvro Sarkar, head of the energy sector group at DBS Bank.
However, on Monday, executives from some of Europe's largest energy producers questioned forecasts of an oil supply surplus next year, citing growing demand and declining production. U.S. Deputy Energy Secretary James Denley said he did not believe there would be an oil surplus in 2026.
OPEC+'s decision to maintain production targets came after Russia lobbied for a pause in talks, as it would be difficult for it to increase exports due to Western sanctions, four OPEC+ sources said.
In October, the U.S. and UK imposed sanctions on two of Russia's largest oil companies - Rosneft and Lukoil.
JP Morgan noted in its memo: "Our oil strategists continue to believe that, despite the increased risk of disruptions, U.S. measures, along with additional actions by the UK and EU, will not prevent Russian oil companies from continuing to operate."
Despite falling oil prices, sanctions could continue to provide some support to prices in the near term, independent analyst Tina Teng believes.
Market participants are now awaiting the latest data from the American Petroleum Institute (API) on U.S. oil inventories, due to be released later today, for further trading signals. A previous Reuters poll showed that U.S. crude inventories are expected to have risen last week.