Oil prices steady as traders weigh modest OPEC+ output hike and oversupply fears

Investing.com-- Oil prices held steady on Tuesday after gaining sharply in the previous session, as investors weighed the impact of a smaller-than-expected OPEC+ output hike next month against expectations for a supply glut.

As of 08:12 ET (12:12 GMT), Brent Oil Futures expiring in September were unchanged at $65.47 per barrel, while West Texas Intermediate (WTI) crude futures edged up 0.1% to $61.72 per barrel.

Both benchmarks jumped over 1% on Monday, rebounding after a sharp weekly loss, after the Organization of the Petroleum Exporting Countries and its allies agreed to raise production modestly, easing market fears of a sudden supply glut.

Markets weigh OPEC+ hike decision amid supply glut worries

The Organization of the Petroleum Exporting Countries and its allies, a group known as OPEC+ which includes Russia, has said it will increase output by about 137,000 barrels per day, maintaining the cautious pace adopted in October. The restrained move reassured traders that the group remains focused on price stability rather than reclaiming market share.

"The group remains cautious about increasing its production share in the global oil market on predictions of an upcoming supply surplus in the fourth quarter as well as next year," analysts at ING said in a note.

Last month, the International Energy Agency had projected a record surplus in 2026 if OPEC+ continued raising output and non-OPEC producers, including the United States and Brazil, expanded supply.

The agency said global oil production could rise by over 2 million barrels per day next year, while demand growth remains sluggish amid weak economic activity in China and Europe.

Ukraine’s attacks on Russia’s energy infrastructure support oil

Oil also drew support from renewed geopolitical tension after Ukraine stepped up attacks on Russian energy infrastructure. Reports stated that drone strikes hit refineries in Kirishi and Ryazan, disrupting fuel processing and tightening Russian export availability.

Meanwhile, the U.S. government shutdown, now in effect since October 1, has delayed key economic data releases, leaving market participants cautious about the Federal Reserve’s policy outlook.

That opacity is threatening to dampen some of the bullish conviction in oil, especially as the shutdown raises fears of a broader economic drag.

(Scott Kanowsky contributed reporting.)