Brent moves lower as OPEC continues to increase supply

The front-month ICE Brent contract has declined by $0.28/bbl on the day, to trade at $65.30/bbl at 09.00 GMT.

IMAGE: Oil storage units. Getty Images

Upward pressure:

Brent crude has gained some upward support amid persistent risks to Russian oil supplies following repeated attacks on one of its largest oil refineries.

The Kirishi oil refinery has halted operations at one of its main crude distillation units after a drone attack caused a fire on 4 October, Reuters reported.

The facility has a processing capacity of about 20 million mt/year, and recovery is expected to take around a month, Reuters reported citing two industry sources.

“In the last two months, Ukraine has attacked at least 15 Russian refineries, reducing refinery runs by over 500kb/d [500,000 b/d], with refinery throughput falling below 5mb/d [5 million b/d],” remarked ANZ Bank’s senior commodity strategist Daniel Hynes.

Downward pressure:

Oil has edged lower after the Organization of the Petroleum Exporting Countries and its allies (OPEC+) announced another production increase for November.

Eight members of the coalition agreed to collectively increase their production by another 137,000 b/d next month.

This marks the seventh consecutive production hike, though it is significantly smaller than the monthly output increase of about 547,000 b/d in September.

“While this increase isn’t as dramatic as some industry rumors suggested, it still is another monthly hike since April—amounting to roughly 2.5 million additional barrels a day added to global supply,” Price Futures Group’s senior market analyst Phil Flynn said.

By Aparupa Mazumder

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