Oil prices are down sharply on a report that Plus will likely raise production quotas by at least 137,000 barrels per day at the October 5th meeting, according to some unnamed sources. That story seemed to overshadow the fact that Europe is imposing more sanctions on Iran, as it appears that the market wants to believe that is going to flood the market. Also reports that we are going to see the resumption of oil exports by Iraq’s Kurdistan region via Turkey raised the global supply outlook.
Now, forget the fact that this increase in quota doesn’t really mean 137,000 more barrels only a number, and the real addition to the market would be about half of that in actual barrels. Yet, the thing you have to remember is that the market seems to get these headlines every time oil is ready to break out on the upside, which leads you to believe that whoever is leaking these OPEC Plus stories seems to suggest that OPEC does not want oil prices to go higher than $65 a barrel without a fine. So, it’s very possible that OPEC Plus is very happy with oil prices where they are; it’s in a perfect range for them and it’s at a perfect range to keep the heat off them from President Trump, who obviously would be very upset if OPEC was restraining production and driving prices up at the same time. These lower prices also make it more difficult for U.S. shale producers to raise production.
Still according to Reuters, energy firms this week added oil and natural gas rigs for a fourth week in a row for the first time since February, energy services firm Baker Hughes said in its closely followed report on Friday. The oil and gas rig count, an early indicator of future output, rose by seven to 549 in the week to September 26, its highest since June.
Amena Bakr says that according to her sources within OPEC+, there have been no consultations with regards to the group’s November policy yet. The meeting is due to take place on the 5th of Oct.
There has been no evidence of an anticipated oversupply, as noted by John Kemp at Kemp Energy. Brent futures for November 2025 are showing indications of a squeeze approaching the contract’s expiry. Consequently, benchmark prices have increased while OPEC⁺ has continued to raise production levels. On September 29, the one-month spread between November and December entered a backwardation of nearly $1 per barrel, compared to 28 cents on September 9, despite most analysts forecasting that crude oil will be oversupplied in the last months of the year.
An interesting development today is the strength of the gasoline crack. Traditionally, diesel cracks have been dominant over the past several weeks; however, tightening gasoline supplies in Europe have recently resulted in stronger gasoline cracks in the United States. This shift is expected to drive increased exports, as Russia has reduced its gasoline exports due to attacks on its refineries by Ukraine.
After Monday’s sell-off, a rebound is likely on Tuesday since the news may not justify such a drop. Markets often need a day to adjust after unnamed-source stories.
Natural gas prices remain steady with rising demand ahead of winter, supported by Texas heat, while hurricanes currently pose no threat to production and little threat to demand.
Fox Weather reports that Tropical Storm Imelda is expected to become a hurricane and slam Southeast coast with large waves, deadly rip currents. According to the Volusia County Sheriff’s Office in Florida, a 51-year-old man from “out of state” drowned after he was pulled out into the ocean by a rip current and couldn’t make it back to shore.
The good news is that the forecast track for Imelda shows the future hurricane making a sharp turn to the east, sparing the Southeast from direct impacts from the storm. However, indirect impacts, such as rain, gusty winds, massive waves, coastal flooding and dangerous rip currents are expected along the coast from Florida to North Carolina.
As of the latest advisory from the National Hurricane Center (NHC), Tropical Storm Imelda has maximum sustained winds of 45 mph with some higher gusts, and gradual strengthening is expected. The NHC said Imelda could become a hurricane by Tuesday. Tropical Storm Imelda is currently located about 60 miles south of Great Abaco Island in the northwestern Bahamas, and less than 300 miles to the southeast of Cape Canaveral, Florida.