Oil prices are rising on supply fears after falling to near 6-month lows.
Oil prices increased on Thursday as supply fears spurred a rebound from multi-month lows hit the previous session following dismal fuel demand data from the United States.
At 0653 GMT, Brent crude prices were up 10 cents, or 0.1 percent, at $96.88 a barrel, while West Texas Intermediate (WTI) crude futures were up 21 cents, or 0.2 percent, at $90.87.
In the previous session, both benchmarks plummeted to their lowest levels since February after US data showed crude and gasoline stocks unexpectedly increased last week and OPEC+ decided to raise its oil output target by 100,000 barrels per day (bpd), or approximately 0.1 percent of global oil demand.
The Organization of Petroleum Exporting Countries (OPEC) and its allies, notably Russia, have already increased output but struggled to fulfil targets since most members have already exhausted their output capacity.
“In September, OPEC+ agreed to increase production by 100,000 barrels per day, a significant increase over prior months’ output. The global energy industry is still experiencing supply problems “CMC Markets analyst Leon Li concurred.
He also predicted that WTI oil prices would “oscillate” between $90 and $100 per barrel.While the US has encouraged the group to increase output, spare capacity is limited, and Saudi Arabia may be hesitant to increase output at the expense of Russia, which is facing sanctions as a result of the Ukraine incursion, which Moscow refers to as a “special operation.”
Three delegates told Reuters that OPEC+ has reduced its prediction for the oil market surplus this year by 200,000 barrels per day to 800,000 barrels per day ahead of the meeting. “It appears that OPEC+ is resisting efforts to increase output as the crude demand picture continues to deteriorate.” “The globe is fighting a continuous global energy crisis, and OPEC+ will not help,” wrote Edward Moya, senior analyst at OANDA, in a note.
The oil market will stay tight in the immediate term, which implies there should be limited downside here. Even as the global economic slump accelerates, crude prices should find strong support around the $90 level and subsequently return towards the $100 barrel level.”
The outlook for oil demand is clouded by mounting concerns about an economic downturn in the United States and Europe, debt problems in emerging market countries, and China’s tough zero COVID-19 policy, the world’s largest oil importer.
US crude oil inventories climbed unexpectedly last week as exports declined and refiners reduced runs, while gasoline stocks grew unexpectedly as demand slowed, according to the Energy Information Administration.However, the Caspian Pipeline Consortium (CPC), which connects Kazakh oil reserves to the Russian Black Sea port of Novorossiisk, stated on Thursday that supplies were much lower, without providing data.
