Oil rises on supply concerns
Oil rose after an industry report showed U.S. inventories dwindling, and investors eagerly awaited a report from the International Energy Agency that could shed light on market balances in the second half.
Brent rose to $83 after falling 1.2 percent on Tuesday as persistent U.S. inflation dampened the demand outlook. US crude oil traded above $78. The American Petroleum Institute reported that nationwide crude oil inventories fell by 3.1 million barrels last week, and the closely watched hub of Cushing, Oklahoma, also saw a decline, according to sources familiar with the data.
The Paris-based IEA’s outlook will be published later Wednesday and will follow the monthly assessment from the Organization of Petroleum Exporting Countries. The cartel’s analysis showed that OPEC+ countries participating in the group’s latest round of production cuts exceeded their quotas last month.
Oil has gained value this year as OPEC+ cut production to prevent a supply glut and support global prices. In the process of deciding whether to expand restrictions at the meeting to be held on June 1, members are grappling with the issue of how much crude oil they can pump; Many major exporting countries are seeking to increase their recognized capacity levels.
“The easing of OPEC+ restrictions within the year is not yet certain” due to Saudi Arabia’s incentive for higher prices to balance its budget, said Vishnu Varathan, head of Asia economics and strategy at Mizuho Bank in Singapore. He said this could mean “anxious and tense dynamics” for OPEC+ at a time when other members are trying to increase production.