Crude oil futures climbed during mid-morning Asian trade Oct. 5 as OPEC+, the coalition of OPEC and other oil producers, announced that it will maintain its current output policy despite pressure to boost production further.
At 11:09 am Singapore time (0309 GMT), the ICE December Brent futures contract was up 39 cents/b (0.48%) from the previous close at $81.65/b, while the NYMEX November light sweet crude contract was 28 cents/b (0.36%) higher at $77.90/b.
Crude futures were higher since early in the US trading session after the OPEC+ Joint Ministerial Monitoring Committee agreed to keep to its existing plan and only increase output in November by 400,000 b/d, dashing expectations from certain market segments, and despite calls to add more barrels as demand has recovered faster than expected in some parts of the world.
US officials, concerned with rising domestic fuel costs, had previously complained that the OPEC+ alliance was holding back too much supply, with the Biden administration dispatching a delegation to Saudi Arabia in late September to discuss oil and other issues.
"Crude oil gained after OPEC+ stuck with its scheduled increase in oil output. Members of the oil producing group ratified the 400,000 b/d increase schedule for November," ANZ research analysts said Oct. 5, adding that OPEC+ saw little need to boost supply further, as Russian Deputy Prime Minister, Alexander Novak, said the agreement will allow them to normalize the market situation.
Internal forecasts reviewed by OPEC+ delegates showed global oil demand growth of only 700,000 b/d between September and December, with an oversupply looming by the end of the year, which seemed to support a conservative approach.
At 11:09 am in Singapore, NYMEX November RBOB was 1.13 cents higher from the previous close at $2.3198/gal, while November ULSD climbed 45 cents to stand at $2.4411/gal.
OPEC+ will meet next on Nov. 4 to review the group's production plans for December.
Meanwhile, the global oil market remains supported by the strength in natural gas. According to OANDA's senior market analyst Ed Moya Oct. 5 that natural gas shortage is leading to increased demand for alternative sources of energy, with crude being the favorite.
Aramco CEO, Amin Nasser pointed out that 500,000 b/d of crude demand has come from the lack of natural gas, Moya added, which in turn has the potential to get "very ugly" for natural gas as the north is not even in winter.