Oil prices regained some ground on Wednesday after a report claimed that the Organization of the Petroleum Exporting Countries and allies may delay the planned increase in production in December.
Reuters reported, quoting three unnamed sources, that OPEC+ may delay its planned increase in production by a month.
The sources said that the cartel is concerned about poor demand and rising oil supply.
At the time of writing, the price of West Texas Intermediate crude oil on the New York Mercantile Exchange was at $68.89 per barrel, up 2.5% from the previous close.
Brent crude prices on the Intercontinental Exchange was at $72.38 per barrel, up2.3% from the previous close.
Both benchmarks have snapped a two-day losing streak to trade higher on Wednesday.
Prices had fallen sharply over the last two sessions, dropping as much as 6% on Monday after Israel’s limited strike on Iran over the weekend.
OPEC+ decision
Sources told Reuters that the oil market was not “healthy enough” for the planned increase in production from December.
Two of the sources, who are people familiar with OPEC+ talks, said the December increase could be delayed for a month at least, while the third, an OPEC+ delegate, did not specify a time frame, according to the report.
After the report came out oil prices reacted positively to the prospect of less supply going into December.
The market had been worried about oversupply as oil demand continued to be poor with top importer China struggling with its economy.
OPEC’s hefty output cuts
The cartel is scheduled to increase oil production by 180,000 barrels per day from December.
Saudi Arabia, the de-facto leader of OPEC+, had recently indicated that it is ready for lower oil prices in order to regain market share.
Eight members of the OPEC+ group, including Saudi Arabia and Russia, had been adhering to voluntary production cuts of 2.2 million barrels per day since the beginning of this year.
The voluntary production cuts are on top of 3.6 million barrels per day of output cut by the larger OPEC+ group, which has been in place since late 2022. This amounts to almost 6% of world oil supply.
US inventories fall
Crude oil inventories in the US fell unexpectedly in the week ended October 25, which further boosted sentiments in the oil market.
According to the US Energy Information Administration (EIA) data, oil inventories in the country fell by 573,000 barrels last week.
The figure stands in contrast to the previous week’s build of 1.6 million barrels. Falling inventories supported prices.
Moreover, private data from the American Petroleum Institute (API) on Tuesday also showed that US stockpiles of oil fell by 573,000 barrels last week.
Refined products also witnessed draws, with distillate and gasoline inventories falling by 1.46 million barrels and 282,000 barrels, respectively, according to API’s data.
More details from the official EIA report is awaited.
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