Oil prices held steady on Monday as the market balanced the latest OPEC+ supply increase with the group’s plans to pause output increases in the first quarter of 2026 along with fears of an oil supply glut and weak factory data in Asia.
Brent crude futures rose 12 cents, or 0.2 per cent, to settle at $64.89 a barrel. US West Texas Intermediate (WTI) crude rose 7 cents, or 0.1 per cent, to settle at $61.05.
OPEC+, the Organization of the Petroleum Exporting Countries (OPEC) and allied producers, agreed on Sunday to raise output by a small 137,000 barrels per day (bpd) in December.
OPEC+ also agreed to pause increases in the first quarter of next year.
“Any negative price implications from OPEC’s furtherance of this quarter’s 137,000 bpd production increase were offset by the cartel’s suggested pause in output advances after the end of this year,” analysts at energy advisory firm Ritterbusch and Associates said in a note.
On Monday, Morgan Stanley raised its Brent crude forecast for the first half of 2026 to $60 a barrel from $57.50, citing the decision by OPEC+ to pause quota hikes in the first quarter of next year and recent US and EU sanctions on Russian oil assets. Last month, the International Energy Agency said the global oil market faces a surplus next year of as much as 4 million bpd. OPEC expects global oil supply and demand to balance next year. European oil CEOs at a conference in Abu Dhabi cautioned against being too bearish on oil.
Analysts at RBC, a Canadian bank, said Russia remains a supply wild card after US sanctions on Russian producers Rosneft and Lukoil and attacks on energy infrastructure. Headwinds for Asia’s big manufacturing hubs persisted in October, business surveys showed on Monday. Asia is the world’s biggest oil-consuming region. Chinese oil demand growth has slowed since 2020 as the country transitions to greener energy, oil major TotalEnergies CEO Patrick Pouyanne said on Monday. He said he remained optimistic long-term due to rising demand in India.
Strong dollar
A strong US dollar weighed on oil prices by making crude more expensive for buyers using other currencies. The dollar hovered at a three-month high against a basket of peers.
Federal Reserve officials kept pressing competing views of risks facing the US economy, and the debate should intensify ahead of the central bank’s next policy meeting in the absence of data suspended due to the federal government shutdown.
Federal Reserve Bank of Chicago President Austan Goolsbee said on Monday he’s in no hurry to cut interest rates again with inflation still too far above the central bank’s 2 per cent target. San Francisco Federal Reserve President Mary Daly on Monday said she supported the US central bank’s interest rate cut last week, and will want to sift through incoming data to assess if another reduction in borrowing costs is warranted at the December 9-10 meeting.
Lower interest rates can boost economic growth and oil demand by reducing costs for consumers.
US manufacturing contracted for an eighth straight month in October as new orders remained subdued, and suppliers were taking longer to deliver materials to factories against the backdrop of tariffs on imported goods. President Donald Trump said the US military could deploy troops to Nigeria or carry out air strikes to stop what he called the killing of large numbers of Christians in the West African country, an OPEC member and Africa’s biggest oil producer. (Reporting by Scott DiSavino in New York and Shadia Nasralla in London, additional reporting by Florence Tan in Singapore; Editing by David Goodman and David Gregorio)
