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Oil prices rise 1% following lower-than expected OPEC+ production increase

Early Monday, oil prices were up about 1% after OPEC+ reported a modester monthly production increase than expected. This helped to calm some fears about the addition of supply.

Brent crude futures were up 63 cents or 1% to $65.16 per barrel at 2310 GMT. U.S. West Texas intermediate crude was $61.46 a barrel, an increase of 58 cents or 1%.

The price increase is primarily due to OPEC+’s decision to raise production less than expected next month, as the group aimed at cushioning the recent slump on oil markets," said Tina Teng, an independent analyst.

She added, "However the crude prices are likely to remain low due to a gloomy economic outlook around the world."

The Organization of Petroleum Exporting Countries, Russia, and some smaller producers announced on Sunday that they would increase production by 137,000 barrels a day (bpd) from November, the same modest increase monthly as in October. This is despite persistent concerns about a looming glut of supply.

Sources said that Russia wanted to increase output by 137,000 bpd in order to avoid price pressure, but Saudi Arabia preferred to double, triple, or even quadruple this figure to gain market share faster.

ANZ analysts wrote in a Monday note that "OPEC+’s decision to raise production by another 137,000 bpd could be manageable given the rising disruptions in supply due to the tightening of sanctions by Europe and America against Russia."

Analysts added that "Ukraine continued to intensify their attacks on Russian energy installations, targeting the Kirishi Refinery, one the largest Russian refineries with a processing capacity of over 20 million tonnes per year."

Last week, the Group of Seven nations finance ministers announced that they would increase pressure on Russia to stop Moscow from generating revenue due to its invasion of Ukraine. They said this by targeting those countries who continue to purchase Russian oil or facilitate circumvention of sanctions. (Reporting and editing by Richard Chang, Jamie Freed, and Emily Chow)

(source: Reuters)