Oil prices take a breather, OPEC+ sticks to output plans

Oil prices fell on Thursday amid profit-taking, but remained underpinned by tight supply as OPEC+ producers stuck to planned moderate output increases.

Brent crude was down 52 cents, or 0.5 per cent, at $88.95 a barrel at 1450 GMT, after rising 31 cents on Wednesday. U.S. West Texas Intermediate crude was down 53 cents, or 0.6 per cent, at $87.73 a barrel, having gained six cents the previous day.

“A risk off environment and a modestly stronger dollar are one driver weighing on crude prices,” said Giovanni Staunovo, commodity analyst at UBS.

“The other is probably the realisation that the geopolitical tensions in Eastern Europe and the Middle East have so far not disrupted oil production.”

Still, tight global supplies and those geopolitical tensions have boosted oil prices by about 15 per cent so far this year.

The Organisation of the Petroleum Exporting Countries and allies led by Russia, known as OPEC+, agreed on Wednesday to stick to monthly increases of 400,000 barrels per day (bpd) in oil output despite pressure from top consumers to raise output more quickly. 

“At this juncture, even if OPEC+ were ramping up faster, this would only come at the expense of a critically lower level of spare capacity,” Goldman Sachs said in a note.

The bank, which forecasts Brent topping $100 a barrel in the third quarter, had predicted that OPEC+ may consider a faster unwinding of its production cuts.

An explosion has rocked an oil production vessel owned by Nigeria’s Shebah Exploration and Production Company Ltd (SEPCOL) with a 22,000 bpd capacity, the company’s chief executive IkemefunaOkafor said on Thursday.

Nigeria had already been struggling to meet its production quota under the OPEC+ deal due to under-investment, though the blast is unlikely to have any major impact on output.

U.S. crude stockpiles fell by 1 million barrels last week, the U.S. Energy Information Administration said on Wednesday, while distillate inventories also dropped amid strong demand both domestically and in export markets.

Cold weather forecasts for the central United States and parts of the Northeast this week also gave prices a floor.

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