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Oil futures moved higher Tuesday, with the U.S. benchmark extending a rise that saw it close at a nearly seven-year high the previous session after the Organization of the Petroleum Exporting Countries and its allies decided not to accelerate its plan for gradually relaxing production cuts.
West Texas Intermediate crude for November delivery
CL00,
CLX21,
rose $1.06, or 1.3%, to $82.32 a barrel on the New York Mercantile Exchange after posting the highest finish for a front-month contract since Nov. 11, 2014 on Monday.
December Brent crude
BRN00,
BRNZ21,
the global benchmark, was up $1.09, or 1.3%, at $82.35 a barrel on ICE Futures Europe. Brent on Monday posted its highest close since Oct. 16, 2018.
Crude futures jumped Monday after OPEC+ affirmed its plan to raise output by 400,000 barrels a day in November, in keeping with a plan agreed in July to increase production by that amount in monthly increments until existing output curbs imposed during the pandemic are fully reversed.
“In view of the significantly higher price level and the tight market situation, several market participants had been hoping for a more pronounced expansion of supply,” said Carsten Fritsch, commodity analyst at Commerzbank, in a note.
“Even after the production hike that has been decided, the oil market is likely to show a sizable supply deficit in the fourth quarter because oil demand is considerably more robust than anticipated,” he said.
Commodities Corner: Why the oil market is both bullish and ‘on edge’ after the OPEC+ oil output decision
Analysts said momentum could continue to take crude prices higher in the near term.
“Oil prices have risen almost uninterruptedly over the past seven weeks, adding more than 25% over that period. That does not mean that the potential of the rally has been exhausted,” with much of the rise marking a recovery from a deep correction, said Alex Kuptsikevich, senior market analyst at FxPro, in emailed comments.
“Oil has lagged noticeably behind [natural] gas and coal in its momentum and potentially has significant upside potential,” he said.
