Oil prices fall amid fears of sanctions against Russia and increased OPEC+ production
Kyiv • UNN
Brent crude futures fell 7 cents to $64.33 a barrel. U.S. West Texas Intermediate crude futures fell 7 cents to $60.08.
Oil prices edged lower on Wednesday, extending a three-day decline, as doubts about the effectiveness of sanctions against Russia and a potential increase in OPEC+ output weighed on the market, UNN reports with reference to Reuters.
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Brent crude futures fell 7 cents, or 0.11%, to $64.33 a barrel at 04:11 GMT (06:11 Kyiv time). U.S. West Texas Intermediate crude futures fell 7 cents, or 0.12%, to $60.08.
U.S. crude, gasoline and distillate inventories fell last week, market sources said, citing American Petroleum Institute data released on Tuesday. A larger-than-expected inventory draw triggered a short-term price rally in the last trading session and supported the market this morning.
The unexpected inventory draw in the U.S. contributed to price gains this morning, but according to Priyanka Sachdeva, senior market analyst at Phillip Nova, the markets are being driven by a combination of sanctions risks and OPEC+'s stance.
"This does not mean that the rally has unlimited upside potential. While the sanctions and supply situation is already built in, demand remains weak and spare capacity persists," Sachdeva said.
Last week, Brent and WTI crude prices saw their biggest weekly gain since June after U.S. President Donald Trump, for the first time in his second term, imposed Ukraine-related sanctions against Russia, targeting major oil companies Lukoil and Rosneft.
However, doubts that sanctions could offset the supply glut and talk of increased output within the OPEC+ deal weighed on prices; both benchmarks fell 1.9%, or more than $1, in the previous session.
On Tuesday, the Kremlin said that Russia offers high-quality energy at a good price, and its partners will decide for themselves whether to buy energy from it after the U.S. sanctions are imposed.
Many Indian refineries have halted new orders for Russian oil, awaiting clarity from the government and suppliers, and some have turned to the spot market for alternatives, industry sources said.
However, on Tuesday, state-owned Indian Oil said it would not stop buying Russian oil as long as it complies with sanctions.
The U.S. government has provided written assurances that Rosneft's German business will not be subject to sanctions, as the assets are no longer under Russian control, Germany's economy minister said.
Four sources familiar with the talks said OPEC+, the world's largest group of oil-producing countries, was leaning towards a moderate increase in output in December. Two sources indicated an additional 137,000 barrels per day.
On Tuesday, the CEO of Saudi state oil giant Aramco said that oil demand was high even before sanctions were imposed on Russian oil companies, and demand in China remains strong.
Early in the second half of the week, the Federal Reserve's upcoming interest rate decision and a meeting between U.S. and Chinese leaders could support market sentiment, Haitong Securities said in an analytical note.