Oil Holds Steady Despite Rising U.S. Oil Inventories

Oil prices held steady on Thursday after rising above $80 a barrel this week, shrugging off bearish factors such as rising U.S. crude oil inventories and a strong dollar amid consensus that a supply deficit will stay for coming months.

Brent crude for November delivery was up 21 cents at $78.85 a barrel by 0856 GMT on its expiry day while December loading crude was at $78.35. U.S. oil rose 32 cents to $75.15 a barrel.

U.S. oil and fuel stockpiles increased 4.6 million barrels in the week to Sept. 24 to 418.5 million, the U.S. Energy Department’s Energy Information Administration (EIA) said on Wednesday.

In another typically bearish development, the U.S. dollar held near one-year highs, making oil more expensive for holders of other currencies.

But expectations of a continued supply deficit supported prices. Citigroup is forecasting oil balances to be in a 1.5 million-barrel-per-day deficit on average over the next six months, even with continued supply increases.

Next week, the Organization of the Petroleum Exporting Countries and allies including Russia, a grouping known as OPEC+, are expected to hold to a pact on adding 400,000 barrels per day (bpd) to their output for November.

“(This increase) would likely guarantee declining oil inventories for the rest of the year,” said PVM analyst Tamas Varga.

The rise in U.S. inventories came as production in the Gulf returned to around the levels they were before Hurricane Ida hit about a month ago.

A possible dampener on oil prices, the power crisis and housing market concerns in China have hit sentiment recently because any fallout for the world’s second-biggest economy would likely have meant a hit on oil demand, analysts have said.

China is the world’s biggest crude importer and its second-largest user after the United States.