Brent loses momentum as market eyes potential supply glut

The front-month ICE Brent contract has declined by $0.34/bbl on the day from Friday, to trade at $66.79/bbl at 09.00 GMT.

IMAGE: Oil storage tanks. Getty Images

Upward pressure:

The ongoing Ukrainian drone attacks on Russian oil facilities have added some risks to supply, and put upward pressure to Brent today.

Several major oil facilities in Russia, including one of the country’s largest oil exporting terminals in Primorsk, came under attack last week. These airstrikes have caused some refinery and pipeline closures, according to market analysts.

“Concerns remain that recent attacks on Russia’s energy infrastructure will impact supplies,” remarked ANZ Bank’s senior commodity strategist Daniel Hynes.

Besides, Brent’s price has moved higher after the European Commission (EC) proposed its 19th package of economic sanctions against Russia.

The EC has sanctioned 118 additional vessels that are allegedly a part of Russia’s shadow fleet, raising the total number of sanctioned shadow fleet vessels carrying Russian oil to more than 560, it said.

Downward pressure:

Weighing on Brent’s price, the total number of rigs drilling for crude oil and natural gas in the US rose by three last week to 542 units, according to Baker Hughes.

Specifically, oil rigs increased by two to 418, while gas rigs held steady at 118. This uptick has eased some supply concerns and added downward pressure on Brent crude.

Oversupply concerns, as OPEC+ members steadily restore production, have capped Brent’s price gains.

The Saudi Arabia-led coalition agreed to collectively increase supply by 137,000 b/d in October – marking the sixth consecutive time that they plan to expedite production.

By Aparupa Mazumder

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