West Texas Intermediate (WTI), the US crude oil benchmark, is trading around $61.10 during the early Asian trading hours on Monday. The rise in WTI prices comes after the Organization of the Petroleum Exporting Countries and its allies (OPEC+) signaled a pause in output increases.
OPEC+ announced on Sunday that it plans to pause production hikes in the first quarter (Q1) of 2026, following another modest increase scheduled for next month. The group is set to raise production by about 137,000 barrels per day (bpd) in December, matching the hikes planned for October and November. This move comes as the market faces the prospect of a ballooning oversupply, which has been evident over the past three months.
In addition to supply concerns, geopolitical tensions in the Middle East and the Black Sea region could further support WTI prices. Reuters reported over the weekend that a Ukrainian drone attack targeted one of Russia’s main Black Sea oil ports on Sunday, causing a fire and damaging at least one ship. This strike is part of Kyiv’s strategy to undermine Russia’s war effort by hitting its energy infrastructure. The affected area hosts a major refinery operated by Rosneft PJSC, which, along with Lukoil PJSC, was sanctioned by the US last month.
On the other hand, hawkish remarks from Federal Reserve (Fed) policymakers could strengthen the US Dollar (USD) and put downward pressure on dollar-denominated commodity prices. A stronger USD makes crude oil more expensive for foreign buyers, potentially weighing on demand.
At its October meeting last week, the Fed delivered a 25 basis points (bps) rate cut, lowering the federal funds rate to a target range of 3.75% to 4.00%. Fed Chair Jerome Powell noted during the press conference that this might be the last rate cut of the year, tempering market expectations for further reductions in December.
Traders are also bracing for the upcoming American Petroleum Institute (API) crude oil stocks change report, scheduled for release on Tuesday, which could provide further insights into market dynamics in the near term.
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