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Oil prices rise as fears of oversupply ease after OPEC+ restricts production increase

Investors brushed aside fears of oversupply on Wednesday, after digesting a decision by OPEC+ earlier to limit production increases in the coming month.

Brent crude futures were up 48 cents or 0.7% to $65.93 per barrel at 0400 GMT. U.S. West Texas Intermediate Crude climbed 51 cents or 0.8% to $62.24.

The benchmarks settled broadly flat in the previous session as investors weighed signs of a supply glut against a smaller-than-expected increase to November output from the Organization of the Petroleum Exporting Countries and affiliates.

The market is stuck in limbo. One side believes there will be a glut of supply, while the other believes that the ramp-up won't happen as quickly as expected," said Emril jamil, a senior researcher at LSEG Oil Research.

Jamil said that traders have been betting on the price of crude oil to rise and are currently holding long positions or bets. This is due to continued efforts by Russia's government to reduce its crude exports.

OPEC+ chose to increase production by 137,000 barrels a week, the lowest of the options discussed over the weekend.

Investors are likely to discount production increases until the physical market softens via increasing inventories. This was the conclusion of ANZ analysts on Wednesday.

The analysts at ANZ said that the price gains were capped by the easing of fears about Russian supply disruption. Crude oil shipments have been close to a 16 month high in the last four weeks.

Investors will also be waiting for the Energy Information Administration to release U.S. inventories later on Wednesday.

According to American Petroleum Institute sources, U.S. crude stockpiles rose by 2.78 millions barrels during the week ending October 3, according to figures released on Tuesday.

The API data showed that gasoline and distillate stocks fell.

The EIA reported on Tuesday that the U.S. is expected to surpass its previous expectations in terms of oil production this year. (Reporting and editing by Christopher Cushing, Christian Schmollinger, and Jeslyn Lerh)

(source: Reuters)