Oil: OPEC+ signals a pause to supply increases - ING

As widely expected, OPEC+ announced another Oil supply increase of 137k b/d for December. However, the more interesting takeaway from the meeting was the group's decision to pause supply increases through the first quarter of next year, ING's commodity experts Ewa Manthey and Warren Patterson note.

Oil prices continue to weigh on drilling activity in the US

"The market is expected to be in peak surplus through the first quarter of 2026, so a pause makes sense. However, given recent US sanctions on Russia, there is plenty of uncertainty as to the size of this surplus. If these sanctions disrupt Russian Oil flows, it will eat into the expected surplus early next year, providing OPEC+ the opportunity to rethink its production policy in the early part of 2026. Russian Oil flows in the coming weeks will be watched closely, particularly following the end of the wind-down period on 21 November for transactions with Rosneft and Lukoil."

"The latest positioning data for ICE Brent shows that speculators bought 119,046 lots over the last reporting week to leave them with a net long of 171,567 lots as of last Tuesday. The move was driven by a combination of fresh longs entering the market, along with a lot of short covering. The gross long increased by 56,968 lots, while the gross short fell by 62,078 lots. The large shift over the week reflects the announcement of US sanctions on Russia. Meanwhile, ICE Gasoil also saw a big move over the week, with speculators buying 33,930 lots over the last reporting week to leave them with a net long of 79,696 lots. Russia is a large exporter of diesel, and a combination of sanctions and Ukrainian drone attacks on refinery infrastructure will be raising supply concerns in the middle distillate market."

"The latest data from Baker Hughes shows that the number of active Oil rigs in the US fell by six over the last week to 414. The broader weakness in Oil prices continues to weigh on drilling activity in the US. However, despite the rig count being under pressure for most of this year, EIA data shows that US crude Oil production still managed to hit a record high of 13.79m b/d in August, up 2.9% year-on-year, and less than 1% higher month-on-month. Expectations for a large surplus next year and downward pressure on prices suggest that we should see US crude Oil output struggling to grow in 2026."