DTN Oil Update
Oil Futures Rise Amid Geopolitical Tensions, OPEC Output
HOUSTON (DTN) -- Oil futures prices rose for the second consecutive day on Tuesday, supported by expectations of additional U.S sanctions on Russian oil trade after recent attacks on Ukraine. The bullish sentiment was also fueled by OPEC's announcement of the smallest monthly production quota increase for October.
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On Sunday, OPEC agreed to increase production by 137,000 bpd in October, the smallest monthly hike since the group began ramping up production earlier this year. Market participants perceived the modest increase as a bullish signal, given the hikes in August and September, which were roughly three times higher.
Oil prices have been trading in a narrow range over the past ten weeks, caught between bearish long-term expectations of slowing demand growth and swelling inventories, and bullish signals in the form of low inventories in transparent OECD markets and geopolitical supply concerns surrounding Russian oil. Although oil futures prices edged up for a second consecutive day, OPEC's cautious approach and Saudi Aramco's recent price cuts for Asian shipments suggest that the pressure of bearish fundamentals may outweigh supply risk factors.
Separately, the U.S. Energy Information Administration's September Short-Term Energy Outlook (STEO) projects the Brent crude oil price to average $59.41 bbl in the fourth quarter of this year down, from $68 bbl estimated in August. This would mark a $9 bbl decline year-over-year but remains $1.36 bbl higher than the EIA's August STEO forecast of $58.05 bbl, according to the agency's monthly report released on Tuesday.
The downward revision follows OPEC+ members' decision to increase production, which is expected to contribute to global oil inventory builds averaging more than 2 million barrels per day (bpd) from the third quarter of 2025 through the first quarter of 2026, according to the EIA-STEO report. The EIA stated that its forecast for the fourth quarter of 2025 builds is 0.8 million bpd higher than projected last month.
The NYMEX WTI futures contract for October delivery rose by $0.40 to $62.66 bbl, while the ICE Brent futures contract for November delivery edged up by $0.39 to $66.41 bbl.
October RBOB gasoline futures rose by $0.0325 to $1.9911 gallon, and the front-month ULSD contract increased $0.0079 to $2.3198 gallon.
The U.S. Dollar Index strengthened by 0.363 points to 97.775.
