Oil prices increased on Wednesday as OPEC+ cuts continued to fuel upward price movements in a tight market; however, price rises were tempered by weak demand projections based on US crude stockpile data and dismal global economic performance.
International benchmark Brent crude traded at $79.48 per barrel at 10.32 a.m. local time (0732GMT), a 0.07% gain from the closing price of $79.42 a barrel in the previous trading session on Friday.
The American benchmark West Texas Intermediate (WTI) traded at the same time at $74.86 per barrel, up 0.04% from the previous session's close of $74.83 per barrel.
The price of Brent crude breached the threshold of $80 per barrel during the previous trading session for the first time in months on fears that the OPEC+ cuts announced last week will further tighten supply.
Last week, Russia and Saudi Arabia said they would cut supply in August by 500,000 barrels per day (bpd) and 1 million bpd, respectively, to ensure market stability. Algeria later said it would also reduce output by an extra 20,000 bpd for August.
Price increases came despite the American Petroleum Institute’s announcement late Tuesday of an estimated increase of 3 million barrels in US crude oil inventories, more than the market expectation of a 200,000-barrel rise.
If crude stocks rise faster than predicted, it indicates less demand and a bearish outlook for crude prices.
The US Energy Information Administration's data on oil stocks will be announced later on Wednesday, and if the increase in stock levels is confirmed, prices are expected to decline.
The monetary tightening steps of major central banks in response to inflationary surges, persistent geopolitical risks, and growing recessionary concerns continue to exert downward pressure on prices.
The US Federal Reserve (Fed) will publish later on Wednesday its Beige Book, which gauges economic conditions and offers investor direction on the Fed’s next interest rate move. Experts say markets are pricing in the very high probability of a July rate hike, with expectations that Fed speakers this week will stick to this script.