Oil rises on fading oversupply fear after OPEC+ restrains output increase

Oil prices edged higher in early trade on Wednesday as markets started to brush off oversupply fear for the time being, having digested a decision by OPEC+ to restrain November production increases.

Brent crude futures was up 40 cents, or 0.6%, to $65.85 a barrel by 0045 GMT. U.S. West Texas Intermediate crude climbed 44 cents, or 0.7%, to $62.17.

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.

OPEC+ had opted for a rise of 137,000 barrels a day, the lowest amount among options the group discussed at the weekend.

“Until the physical market shows signs of softening via rising inventories, investors are likely to discount the impact of the production increases,” ANZ analysts said on Wednesday.

Price gains are however capped as fear of Russian supply disruption eased, with crude oil shipments holding close to a 16-month high over the past four weeks, the analysts said. Investors are also on the look out for U.S. inventory trends from the Energy Information Administration later on Wednesday. U.S. crude stocks rose by 2.78 million barrels in the week ended October 3, sources said on Tuesday citing American Petroleum Institute figures.

Conversely, gasoline and distillate inventories fell, the sources said, citing API data.

Meanwhile, U.S. oil production is likely to set a larger record this year than previously expected, the EIA said on Tuesday.