West Texas Intermediate (WTI) crude oil fell slightly by about 0.1% in Asian trading on Tuesday, trading around $61 per barrel. OPEC and its partners announced on Sunday that they would suspend their planned production increases starting in the first quarter of 2026, citing an anticipated seasonal slowdown in oil demand by then.

The decision came as the market widely predicted a supply glut next year, potentially further depressing oil prices. WTI prices have fallen by approximately 9% over the past three months. Analysts point out that this is mainly due to OPEC+ accelerating production recovery to regain market share, while the US and other non-OPEC oil-producing countries are also increasing production.

Nevertheless, the intensified U.S. sanctions against two major Russian oil companies have cast renewed uncertainty over the supply outlook in the short term.

Morgan Stanley analysts Martijn Rats and Charlotte Firkins noted: "While pausing quota increases will not substantially change our production forecasts, it sends an important signal that the organization is still dynamically adjusting supply based on market conditions."

Currently, about eight core OPEC+ members still have a remaining quota of about 1.2 million barrels per day to be restored. However, due to some countries being required to offset previous overproduction, and other members struggling to increase production due to technical and financial issues, the actual progress of production increases is significantly behind schedule.

From a technical perspective, the daily chart for WTI crude oil shows that prices have been consolidating within a range of $59 to $63 recently, forming a clear box pattern. Prices are currently trading above the 9-day exponential moving average (EMA), indicating slightly positive short-term momentum, but the 14-day relative strength index (RSI) is still hovering around 50, suggesting a balance between bullish and bearish forces.

If oil prices can effectively break through the resistance zone above $63, they may open up upward space towards $65; conversely, if they fall below the support of $59, they may return to a weak trend.

Overall, technical indicators support a mild short-term rebound, but the medium-term outlook remains constrained by fundamental pressures from oversupply. Meanwhile, the market is also affected by geopolitical risks. A Ukrainian drone strike recently targeted the Black Sea port of Tuapse, causing an oil tanker to catch fire and damaging loading facilities.

Sources familiar with the matter revealed that crude oil receiving at local refineries has been forced to halt. At the ADIPEC energy conference in Abu Dhabi, executives from several major energy companies also expressed concerns about supply risks.

BP CEO Murray Auchincloss stated, "The latest round of sanctions against Russia has indeed had a substantial impact and weakened supply capacity." Nevertheless, some oil-producing countries are attempting to reassure the market.

UAE energy officials stated publicly on Monday that the current supply growth will not lead to a serious oversupply, and the oil market still has some resilience.

Morgan Stanley's analysis team further noted: "We have raised our short-term price forecast for Brent crude, but at the same time warned that the market will continue to face significant supply surplus pressures in the coming months."

Editor's Note:

OPEC+'s move to suspend production increases is more of a correction in market sentiment than a fundamental shift in the supply and demand structure. In the short term, oil prices may fluctuate between $60 and $65, but if global demand recovery remains weak or geopolitical tensions escalate again, price volatility will increase further.

The disagreements among institutions indicate that the market has not yet reached a consensus, and the real risk lies in the fact that an overly rapid recovery on the supply side may once again suppress oil prices and weaken the fiscal revenue of member countries.