Oil prices rise on supply concerns after falling to a six-month low

Oil prices rose on Thursday as supply concerns prompted a rebound from multi-month lows that fell in the previous session after US data showed weak fuel demand.

Brent crude futures rose 10 cents, or 0.1%, at $96.88 a barrel at 0653 GMT, while West Texas Intermediate (WTI) crude futures were last up 21 cents, a 0.2% gain, at $90.87.

Both benchmarks fell to their weakest levels since February in the previous session after U.S. data showed crude and gasoline 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.

The Organization of the Petroleum Exporting Countries (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.

While the United States 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”.
OPEC+ had trimmed its forecast for the oil market surplus this year by 200,000 barrels per day (bpd) to 800,000 bpd, three delegates told Reuters.

“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 remains clouded by rising fears of an economic slump in the United States and Europe, debt distress in emerging market economies, and a strict zero COVID-19 policy in China.

U.S. crude oil inventories had also risen unexpectedly last week as exports fell and refiners lowered runs, while gasoline stocks also posted a surprise build as demand slowed, the Energy Information Administration said.

But the Caspian Sea Pipeline Consortium (CPC), which links Kazakhstan’s oil fields to Russia’s Black Sea port of Novorossiysk, said supplies fell sharply on Thursday, but did not provide figures.