Oil edged up on Wednesday, with tighter supply resulting from production cuts by Saudi Arabia and Russia offsetting concerns about slowing demand from China, the world’s biggest crude importer, and a report of rising crude inventories in the US.
Increased crude oil supply: Saudi support for market stabilization
Saudi Arabia’s cabinet said on Tuesday that it reaffirmed its support for the precautionary measures taken by the Organization of the Petroleum Exporting Countries and its allies, known as OPEC+, to stabilize the market, state media reported. Brent crude oil futures were up 22 cents, or 0.3%, at $86.39 a barrel at 0806 GMT. US crude West Texas Intermediate (WTI) gained 19 cents, or 0.2%, to $83.11.
Both contracts gained nearly a dollar the previous day. Crude recorded its sixth consecutive weekly rise last week and reached its highest levels since mid-April on Monday, helped by a reduction in OPEC+ supply and hopes of a revival in oil demand in China.
“There’s no doubt that momentum is important,” said Naeem Aslam, investment director at Avatrade. “The trend is clearly upwards.”
Crude oil supply: U.S. inventories on the rise and tensions over Chinese imports
Some bearish pressure came from figures from the American Petroleum Institute (API) on Tuesday, which market sources said showed that US crude inventories rose by 4.1 million barrels last week, although gasoline and distillate stocks fell.
“Prices remain steady this morning despite economic headwinds, helped by API-reported U.S. product drawdowns, although crude inventories rose more than expected,” said oil broker PVM.
Official inventory figures from the U.S. Energy Information Administration are released at 14:30 GMT. On Tuesday, oil came under pressure from Chinese data showing that crude oil imports in July fell 18.8% on the previous month to their lowest daily rate since January, although they were up 17% on the previous year. Saudi Arabia last week extended its voluntary production cut of one million barrels a day to the end of September, and Russia said it would reduce its oil exports by 300,000 b/d in September, providing further support.
