Oil extended gains on Tuesday, supported by the latest oil output hike from OPEC+ being smaller than anticipated, expectations that China will continue stockpiling oil and concerns over potential new sanctions on Russia.
Eight members of the Organization of the Petroleum Exporting Countries and allies agreed on Sunday to raise production from October by 137,000 barrels per day, lower than the increases of about 550,000 bpd they made for September and August.
Brent crude rose 47 cents, or 0.7%, to $66.49 a barrel by 0910 GMT, while US West Texas Intermediate crude climbed 72 cents, or 1.2%, to $62.98.
“Prices are holding up amid speculation that production will not rise by the amount the eight members have allowed themselves, and not least the fact that China, according to data, has been buying around 0.5 million barrels per day towards stockpiling,” said Ole Hansen of Saxo Bank.
China’s stockpiling of oil, which has helped soak up excess production this year, is likely to continue at a similar rate in 2026, the chief strategist for commodity trading house Gunvor said on Monday
Crude is also drawing support from the reduced amount of unused production capacity in OPEC+, said Giovanni Staunovo of UBS. A drop in spare capacity limits the group’s ability to cover for sudden supply shocks and tends to support prices.
“The realization that the October OPEC+ supply increase could be 60,000-70,000 barrels per day is one factor, the other is that OPEC+ spare capacity is much smaller than many thought,” he said of the reasons for the rally.
Speculation of more sanctions on Russia after the country’s biggest air attack on Ukraine set fire to a government building in Kyiv also supported prices. US President Donald Trump said he was ready to move to a second phase of restrictions.
Further sanctions on Russia would diminish its oil supply to global markets, which could support higher oil prices.
Also in focus is the expectation that the US Federal Reserve, which meets next week, will cut interest rates. Lower rates reduce consumer borrowing costs and can boost economic growth and demand for oil.
