TOKYO/SINGAPORE: Oil prices rose on Thursday following losses in the previous three sessions as the potential for tighter sanctions on Russian crude lent some support, though concerns about oversupply in the market capped gains.
Brent crude futures gained 20 cents, or 0.31%, to $65.55 a barrel at 0631 GMT. U.S. West Texas Intermediate crude climbed by 20 cents, or 0.32%, to $61.98 a barrel.
Some analysts attributed the increases to a technical rebound, after Brent and WTI both lost about 1% in the prior session, with Brent closing at its lowest since June 5 and for WTI since May 30.
“Buying interest emerged as WTI neared its $60 support level, while heightened geopolitical risks and speculation about tighter sanctions on Russian crude also lent support,” said Hiroyuki Kikukawa, chief strategist of Nissan Securities Investment, a unit of Nissan Securities.
The Group of Seven nations’ finance ministers said on Wednesday they will take steps to increase pressure on Russia by targeting those who are continuing to increase their purchases of Russian oil and those that are facilitating circumvention.
Also, the U.S. will provide Ukraine with intelligence for long-range missile strikes on Russian energy infrastructure, two officials told Reuters on Wednesday, confirming an earlier Wall Street Journal report.
This will make it easier for Ukraine to hit refineries, pipelines and other infrastructure with the aim of depriving the Kremlin of revenue and oil, the WSJ said.
Stockpiling demand from China, the world’s largest crude oil importer, also underpinned oil prices, limiting the downside, traders said.
Still, a U.S. government shutdown stoked worries about the global economy, while expectations of higher output by OPEC+, the Organization of the Petroleum Exporting Countries (OPEC) and allied producers, weighed on sentiment, capping the price gains, Nissan’s Kikukawa said.
U.S. President Donald Trump’s administration on Wednesday froze $26 billion for Democratic-leaning states, following through on a threat to use the government shutdown to target Democratic priorities.
On the supply side, OPEC+ could agree to raise oil production by up to 500,000 barrels per day in November, triple the increase made for October, as Saudi Arabia seeks to reclaim market share, three sources familiar with the talks said.
That would come even as U.S. and Asian demand starts to decline.
The Energy Information Administration said on Wednesday that U.S. crude oil, gasoline and distillate inventories rose last week as refining activity and demand softened.
Crude inventories rose by 1.8 million barrels to 416.5 million barrels in the week ended on September 26, compared with expectations in a Reuters poll for a 1-million-barrel rise.
