Oil prices advanced on Wednesday as OPEC+ opted for a restrained increase in production to maintain market balance and prevent a supply glut amid rising global output.
Brent crude oil, against which Nigerian oil is priced, rose by 63 cents or 0.96% to $66.08 per barrel at 08:15 a.m. in Nigeria, while U.S. West Texas Intermediate (WTI) gained 66 cents or 1.07% to $62.39.
The upward movement followed the alliance’s decision to add just 137,000 barrels per day (bpd) in November — the smallest option considered during its weekend meeting.
The decision reflects OPEC+’s cautious approach to supply management after several months of price volatility triggered by uneven demand recovery, high U.S. output and persistent geopolitical uncertainties.
Traders initially weighed concerns of a potential supply glut against OPEC+’s moderate production policy.
The market had closed broadly flat in the previous session as investors awaited clarity on how much the group would raise production.
“The market is in price limbo, with one side bent towards a possible supply glut and the other believing the ramp-up will not be as fast as anticipated,” said Emril Jamil, Senior Analyst at LSEG Oil Research.
According to Jamil, some traders are maintaining long positions, betting on sustained efforts to curb Russian crude flows and a slower pace of OPEC+ supply growth.
Analysts at ANZ Research noted that investors are likely to discount the impact of the production increases until the physical market shows signs of softening, particularly through higher inventory levels.
Price gains, however, remain capped as fears of major Russian supply disruptions have eased. Crude oil shipments from Russia have remained near a 16-month high over the past four weeks, according to ANZ.
Meanwhile, the American Petroleum Institute (API) reported that U.S. crude inventories rose by 2.78 million barrels for the week ended October 3, while gasoline and distillate stocks declined.
Official data from the Energy Information Administration (EIA) is expected later on Wednesday and will provide a clearer picture of inventory trends and refinery utilization rates.
Adding further complexity to global supply dynamics, the EIA said on Tuesday that U.S. oil production is set to hit a larger record this year than previously anticipated, driven by technological efficiencies and stable rig counts in major basins.
The surge in American output could offset OPEC+’s production discipline, increasing competition for market share, especially in Asia.
OPEC+’s strategy highlights the alliance’s balancing act between protecting revenues for member nations and ensuring market stability.
The decision to moderate output growth demonstrates a continued preference for gradual supply adjustments rather than aggressive increases that could push prices downward.
For oil-dependent economies like Nigeria, the measured approach offers short-term support to export revenues and budget stability.
A Brent price above $65 per barrel remains favorable relative to Nigeria’s fiscal benchmark, supporting inflows to the Federation Account Allocation Committee (FAAC) and easing fiscal pressures.
As investors await official U.S. data and further supply indicators, oil prices are expected to remain range-bound in the near term, with sentiment shaped by OPEC+’s discipline, Russian export trends, and global economic indicators.