Oil prices have increased, with ICE Brent trading above $65 per barrel and NYMEX WTI close to $62 per barrel. This rise follows a small OPEC+ production boost for November and increased geopolitical risks. Ukraine reports that it attacked Russia’s Kinef oil refinery, which can process over 20 million tonnes of oil annually. This is the second attack on the refinery this month.

OPEC Announces Crude Oil Production Increase

OPEC+ will raise crude oil production by 137,000 barrels per day in November, matching last month’s uptick. This decision coincides with predictions of a surplus in oil supply for the fourth quarter and into next year. The IEA expects a record surplus next year due to increased OPEC+ production. The US oil rig count fell for the first time in six weeks, dropping by two to 422. However, the overall rig count remains steady at 549 as of early October 2023, which is 36 fewer rigs than this time last year. Speculators sold 11,466 lots of ICE Brent last week, reducing their net long positions to 209,113 lots. The data for NYMEX WTI is currently unavailable due to the US government shutdown. As Brent crude pushes above $65, our main concern is supply tightness. OPEC+’s decision to only slightly increase production by 137,000 barrels per day was less than many expected and supports current prices. Geopolitical tensions, especially the strike on Russia’s Kinef refinery, also add a significant risk that could push prices higher in the short term. Considering the current environment, we suggest positioning for potential price increases, perhaps through short-term call options on WTI and Brent. The attack on the Kinef refinery, which can process up to 400,000 barrels a day, is significant as it reduces refining capacity in the market. We experienced a similar situation in 2022 when geopolitical events caused Brent prices to surge over $120, highlighting how quickly supply shocks can impact pricing.

Market Caution and Speculator Behavior

Despite this, we must recognize the growing caution for the fourth quarter and 2026, as both the IEA and OPEC+ expect a surplus in supply. Speculators are responding by cutting their net long positions in Brent for the second week in a row to just over 209,000 lots, which is a level not seen since August 2025. This trend, along with a slight decline in the US oil rig count, indicates that the market is cautious about a potential price drop in the future. Given these mixed signals, traders might consider strategies that benefit from market volatility rather than a single price direction. The uncertainty is heightened by the US government shutdown, which has delayed the CFTC report and obscured speculative positioning in WTI crude. This lack of data complicates hedging American crude and may lead to sharp and unexpected price changes once the information is finally available. Create your live VT Markets account and start trading now.

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