By Georgina McCartney and Trixie Yap
(Reuters) – Oil prices firmed after falling for several months earlier as major producers may delay output increases planned for next month and U.S. inventories fell, although gains were limited due to concerns about continued demand.
November futures rose 15 cents, or 0.1%, to $72.85 by 0402 GMT after falling 1.4% in the previous session to the lowest close since June 27, 2023. US West Texas crude futures October was up 15 cents, or 0.22%, to $69.35 after falling 1.6% on Wednesday to its lowest settlement since Dec. 11.
“Confidential sentiment in oil markets appears to be easing after strong API data and news of OPEC+ reconsidering output, emerged and boosted expectations,” said Priyanka Sachdeva, senior market analyst at Phillip Nova.
The Organization of the Petroleum Exporting Countries and its Russia-led allies, known as OPEC+, are discussing delaying an oil production hike scheduled to begin in October after prices fell, four sources in the producer group told Reuters on Wednesday.
Last week, OPEC+ was scheduled to continue its output hike of 180,000 barrels per day (bpd) in October, part of a plan to gradually reverse its recent 2.2 million bpd cuts.
But the potential end of the conflict halting sales to Libya and softer Chinese demand has prompted the group to reconsider.
Prices on Thursday found further support after data from the American Petroleum Institute (API) showed oil and gasoline prices fell last week, according to market sources citing API figures on Wednesday.
“The API numbers released overnight were constructive,” ING analysts said in a client note, adding that if official government data shows a similar decline later it could be “the biggest weekly decline since June.”
API data showed that crude stocks fell by 7.431 million barrels in the week ended August 30, compared with analysts' expectations in a Reuters poll of a draw of 1 million barrels.
Weekly data on US oil stocks from the Energy Information Administration (EIA) is due on Thursday at 1430 GMT. [EIA/S]
However, the continued demand worries the benefits of the limited amount.
Data published at the weekend by the Chinese government showed that production activity at the world's top oil consumer fell to a six-month low last month as factory-gate prices fell and owners struggled to secure orders.
“Economically, China's slowdown and weak oil demand there, which surprised some in the market, hurt market confidence,” Citi analysts said in a paper.
“In fact, a looser market is expected. Refineries entering the transition period will cut back, the end of the Middle East summer heat should mean that more oil production will be released for export, and weaker refining margins will threaten further cuts to reduce oil production. exit.”
