“Oil prices are being whipsawed by a number of drivers in Q4 2022,” said Commonwealth Bank commodities analyst Vivek Dhar in a note.
“Prices face downward pressure from global growth concerns, a stronger U.S. dollar and rising U.S. 10-year nominal yields. Upward pressure though is coming from OPEC+ supply cuts and imminent EU sanctions on seaborne imports of Russian oil and refined production.”
Oil prices have been boosted by a looming European Union ban on Russian crude and oil products, as well as the output cut from the Organization of the Petroleum Exporting Countries and other producers including Russia, known as OPEC+.
Read more: US says Russia oil price cap will not be aimed at OPEC
The OPEC+ agreed on a production cut of 2 million barrels per day in early October – but analysts expect a smaller decline in actual output of about 1 million barrels per day due to under-production in countries such as Iran, Venezuela and Nigeria.
Seperately, U.S. President Joe Biden announced a plan on Wednesday to sell off the rest of his release from the nation’s emergency oil reserve by year’s end, or 15 million barrels of oil, and begin refilling the stockpile as he tries to dampen high gasoline prices ahead of midterm elections on Nov. 8.
The release however is “too small to impact the market,” said Commonwealth Bank’s Dhar, estimating it would increase global oil supplies by just 0.04 million barrels per day.