Oil prices edged higher on Thursday (November 6), boosted by easing concerns over a potential oversupply as sanctions against Russian companies began to take effect.

After closing at a two-week low in the previous session, Brent crude futures rose 65 cents, or 1%, to $64.17 a barrel at 09:20 GMT, while U.S. West Texas Intermediate crude rose 73 cents, or 1.2%, to $60.33.

Recent sanctions against Russia's largest oil companies two weeks ago raised concerns about supply disruptions, despite rising production from OPEC and its allies, analysts said.

Lukoil's overseas operations are struggling with the sanctions, Reuters reported this week. "There's a slight impact on prices (from the sanctions), but it's not that big," said Jorge Montepeque of Onyx Capital Group. "Based on the numbers, it should be higher, but the market still needs to be convinced of the impact."

Global oil prices fell for a third straight month in October amid concerns about oversupply as OPEC and its allies increased production while non-OPEC producers continued to grow. The broader OPEC+ group's plan to temporarily halt further production increases in the first quarter of next year has eased concerns about oversupply, Haitong Securities said.

However, weakening demand remains a focus. In the year to November 4, global oil demand increased by 850,000 barrels per day, below the 900,000 barrels per day previously projected by J.P. Morgan, the bank said in a client note.

"High-frequency indicators suggest that US oil consumption remains weak," the note said, citing weak travel activity and lower container shipments. In the previous session, oil prices fell after the US Energy Information Administration (EIA) reported that US crude oil inventories rose by 5.2 million barrels to 421.2 million barrels last week.

"We expect downward pressure on oil prices to continue, supporting our below-consensus forecast of $60 per barrel by end-2025 and $50 per barrel by end-2026," Capital Economics said in a note. Saudi Arabia, the world's largest oil exporter, sharply lowered its crude prices for Asian buyers in December, responding to a well-supplied market as OPEC+ producers increased production. (alg)

Source: Reuters