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Oil Rises as Smaller OPEC+ Hike Eases Oversupply Fears

Oil rises as OPEC+ announces smaller-than-expected production hike
- The WTI prompt-month contract rose $0.65 to $61.53/Bbl Monday morning (7:52 AM CT)
- OPEC+ over the weekend announced a 137 MBbl/d production increase, a smaller-than-expected change that eased market concerns about oversupply
  - “The move is well below what had been feared ahead of the weekend meeting,” said Ole Hansen, head of commodities strategy at Saxo Bank
- RBC Capital Markets estimates the actual increase will be “less than half” of the headline figure, as only Saudi Arabia has meaningful spare capacity to boost output
- Given Russia accounted for about a third of the latest 1.66 MMBbl/d tranche, that share could be at risk, wrote Helima Croft, noting continued Ukrainian attacks on Russian energy assets
  - RBC analysts added that Ukraine’s capacity to inflict serious damage on Russian infrastructure “will only increase once it obtains new long-range missiles to augment its drone arsenal”
Refinery margins strengthen in Q3 2025 (EIA)
- Diesel crack spreads climbed to $0.85/gal in July, the highest since February 2024 and nearly double year-ago levels, as geopolitical tensions disrupted supply from Middle East refiners
- After dipping below the five-year average mid-year, spreads rebounded through September
- The rebound reflects renewed pressure on global distillate markets following Russian refinery outages and a government-imposed diesel export ban

Regional Market Insights

Updated regularly with the most important market moves and outlooks.

Natural gas is trading higher, extending gains from last week
- Weather forecasts shifted cooler over the weekend, with Lower-48 temperatures now forecast to fall below the ten-year average later this week
  - This should drive some early season demand, with the first heating degree days of the season now in the two-week forecast period
- According to S&P data, gas production has continued to trend lower, reaching 105.6 Bcf/d this morning
  - Output last week slid from 107.5 Bcf/d at the start of the week to 106.3 Bcf/d on Friday
- Plaquemines LNG hit a new record feedgas level of 3.6 Bcf/d, as the plant continues to start up
Pipeline maintenance could result in wider Transco Z5 basis pricing (NGI)
- Transcontinental Pipeline is beginning planned remediation maintenance from October 7 through October 22
- Flows through Compressor Station 60 will be reduced to about 1.2 Bcf/d from recent levels of about 1.69 Bcf/d
- The maintenance work comes as weather is not expected to drive significant amounts of heating or cooling demand