Oil prices firmed on Thursday, recovering from multi-month lows due to a significant decline in U.S. crude inventories and speculation about a possible delay in output increases by OPEC+ producers. The American Petroleum Institute (API) reported a decrease of 7.431 million barrels in U.S. crude oil inventories last week, far exceeding the expected draw of 1 million barrels.
PVM analyst John Evans commented, “There is a pause of breath and light reprieve for oil prices,” referencing the positive impact of the API report.
Brent crude for November delivery rose by 66 cents (0.9%) to $73.36 a barrel, while U.S. West Texas Intermediate (WTI) crude for October increased by 64 cents (0.9%) to $69.84. Both benchmarks had touched their lowest levels since December just a day prior.
Further support for oil prices came from ongoing discussions among OPEC and its allies, led by Russia, regarding a delay in planned output increases set to begin in October. OPEC+ had previously intended to raise production by 180,000 barrels per day (bpd) as part of a gradual unwinding of recent cuts totaling 2.2 million bpd. However, continued weak demand from China and the potential resumption of Libyan oil exports have prompted the group to reassess its strategy.
HSBC noted that any decision by OPEC+ to delay output increases could be viewed negatively by the market, suggesting that raising production might lead to a surplus starting in Q1 2025, while holding off could indicate an acknowledgment of weak oil demand.
Official U.S. oil stock data from the Energy Information Administration (EIA) is expected later today, along with additional macroeconomic indicators.