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Oil prices rose on Thursday as supply concerns triggered a rebound from multi-month lows plumbed in the previous session after US data signalled weak fuel demand.
Brent crude futures rose 42 US cents, or 0.4%, at $97.20 a barrel by 2.50am GMT, while west Texas Intermediate (WTI) crude futures was last up 49c, a 0.5% gain, at $91.15.
Both benchmarks fell to their weakest levels since February in the previous session after US data showed crude and petrol stockpiles unexpectedly surged last week and as Opec+ agreed to raise its oil output target by 100,000 barrels per day (bpd), equal to about 0.1% of global oil demand.
Oil cartel Opec and allies including Russia, known as Opec+, have been previously increasing production but have struggled to meet targets as most members have already exhausted their output potential.
“Opec+ agreed to increase production by 100,000 barrels per day in September, far lower than previous months’ production. The global energy market still faces supply shortages,” said Leon Li, an analyst at CMC Markets.
He added that WTI oil prices are “likely to oscillate” between $90 and $100 a barrel.
While the US has asked the group to boost output, spare capacity is limited and Saudi Arabia may be reluctant to beef up production at the expense of Russia, hit by sanctions over the Ukraine invasion that Moscow calls “a special operation”.
Ahead of the meeting, Opec+ had trimmed its forecast for the oil market surplus in 2022 by 200,000 bpd to 800,000 bpd, three delegates told Reuters.
“It looks like Opec+ is resisting calls to boost output because the crude demand outlook continues to get slashed. The world is battling the ongoing global energy crisis and it won’t be getting any help from Opec+,” Edward Moya, senior analyst with Oanda, said in a note.
“The oil market will remain tight over the short term and that means we should still have limited downside here. Crude prices should find strong support around the $90 level and eventually will rebound towards the $100 barrel level even as the global economic slowdown accelerates.”
Oil’s demand outlook has been clouded by rising fears of an economic slump in the US and Europe, debt distress in emerging market economies, and a strict zero Covid-19 policy in China, the world’s largest oil importer.
US crude oil inventories also rose unexpectedly last week as exports fell and refiners lowered runs, while petrol stocks also posted a surprise build as demand slowed, the Energy Information Administration said.
Supporting prices on Thursday, however, the Caspian Pipeline Consortium, which connects Kazakh oilfields with the Russian Black Sea port of Novorossiisk, said supplies were significantly down, without providing figures.
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