Oil prices rose more than 2 percent on Wednesday after data showed crude and inventories fell unexpectedly last week and reports that the Organisation of the Petroleum Exporting Countries and its allies, OPEC+ may delay a planned oil output increase.
Brent crude futures settled up $1.43, or 2.01 percent, at $72.55 a barrel and the US West Texas Intermediate (WTI) crude rose $1.4, or 2.08 percent to $68.61.
The US Energy Information Administration (EIA) reported an inventory draw of a modest half a million barrels for the week to October 25.
The change in oil stocks compared with a build of 5.5 million barrels for the previous week, pressured oil prices at the time.
The American Petroleum Institute (API), meanwhile, on Tuesday reported estimated inventory draws across crude and fuels, helping prices move higher for a time. However, they remained subdued due to expectations of a ceasefire in the Middle East.
The country’s petrol stocks shed 2.7 million barrels in the week to October 25, with production at an average of 9.7 million barrels daily. These figures compared with an inventory build of 900,000 barrels for the previous week, when production stood at an average of 10 million barrels daily.
Pressure also came as the market learned that OPEC+ could delay a planned oil production increase in December by a month or more because of concern over soft oil demand and rising supply.
Traders are betting that OPEC+ will hold off on the planned increase, deferring to Saudi Arabia’s top-down approach since the country acts as the de facto leader of the group and has always stepped in to help the alliance when it is underperforming.
The group is scheduled to raise output by 180,000 barrels per day in December. OPEC+ has cut output by 5.86 million barrels per day, equivalent to about 5.7 per cent of global oil demand.
OPEC Monthly Oil Market Report downgraded demand growth for 2024 to 1.9 million barrels per day while demand forecasts for 2025 slipped another 102,000 barrels per day to 1.6 million barrels per day.
China, meanwhile, ramped up imports by 16 per cent month over month in August, but the rise still falls short of August 2023 levels, keeping a lid on demand and by extension, the market.
OPEC+ is scheduled to meet on December 1 to decide its next policy steps.