Oil prices edged up after hitting multi-month lows, as major producers may delay an output increase scheduled for next month, and U.S. inventories dropped. Gains, however, were limited by persistent concerns over demand.
Brent crude futures for November delivery rose 35 cents, or 0.48%, to $73.05 a barrel at 0607 GMT after dropping 1.4% in the previous session, reaching their lowest close since June 27, 2023. U.S. West Texas Intermediate crude for October delivery was up 35 cents, or 0.51%, to $69.55 a barrel after falling 1.6% on Wednesday, marking the lowest settlement since December 11.
“Pessimism in oil markets seems to have eased after robust API data and news of OPEC+ reconsidering its output hike, fueling optimism,” said Priyanka Sachdeva, senior market analyst at Phillip Nova.
The Organization of the Petroleum Exporting Countries (OPEC) and its allies, led by Russia, known as OPEC+, are discussing delaying their planned October output increase due to the recent sharp drop in prices, according to four sources within the group.
Last week, OPEC+ planned to proceed with a 180,000 barrels-per-day (bpd) output hike in October, part of a gradual unwind of their recent 2.2 million bpd cut.
However, potential resolutions to the dispute halting Libyan exports and soft Chinese demand have led the group to reconsider.
Prices were also supported by American Petroleum Institute (API) data showing U.S. crude stockpiles fell by 7.431 million barrels last week, significantly more than analysts’ expectations of a 1 million barrel draw.
“API numbers released overnight were constructive,” noted ING analysts in a client report, adding that if official government data confirms the decline, it could mark the largest weekly drop since June.
The Energy Information Administration (EIA) is set to release weekly U.S. oil stocks data at 1430 GMT on Thursday.
Market participants are also awaiting additional U.S. macroeconomic indicators due later on Thursday.
“In the short term, as key U.S. economic growth data is expected today and tomorrow, short-term speculators may be hesitant to take fresh bearish positions on WTI, especially with short-term momentum indicators showing oversold readings,” said OANDA senior market analyst Kelvin Wong.
Ongoing demand concerns in China, the world’s largest oil importer, continued to cap price gains. Data released over the weekend by the Chinese government showed manufacturing activity slumped to a six-month low, with factory prices falling and orders declining.
“Economic slowdown in China and weaker-than-expected oil demand have hurt market confidence,” said Citi analysts in a report.