Oil prices raised on Thursday on a more-than-expected drop in US crude oil inventories, although investor caution is dampening further price hikes ahead of the OPEC decision on production quotas after July.
International benchmark Brent crude was trading at $75 per barrel at 0720 GMT for a 0.51% increase after closing Wednesday at $74.62 a barrel.
American benchmark West Texas Intermediate (WTI) was at $73.92 per barrel at the same time for a 0.61% increase after it ended the previous session at $73.47 a barrel.
The larger-than-anticipated drop in crude oil stocks in the US, the world's largest oil consumer, was the main driver of the limited oil price increase, as such reductions signal an uptick in demand in the country.
Inventories decreased by 1.5% for the week ending June 25, according to the latest data released by the Energy Information Administration (EIA).
Inventories fell by 6.7 million barrels to 452.3 million barrels, higher than the market expectation of a 4.4 million-barrel draw.
Investors are focused on the meeting of the Organization of Petroleum Exporting Countries (OPEC) and non-OPEC producing countries, known as OPEC+, later on Thursday when they will discuss the production policy to be adopted from August.
The group had previously agreed to gently raise production until the end of July.
Experts say Saudi Arabia is expected to take a more cautious approach due to the fragility of global oil demand, while some other countries, including Russia, will seek an output rise based on the positive demand outlook and high oil prices.
'In the high August season, OPEC+ could theoretically raise production by at least 1.5 million bpd [barrels per day] to meet the demand spurt and still keep the market in equilibrium,' said Rystad Energy’s Oil Markets Analyst Louise Dickson.
She said OPEC+ is unlikely to make such a big supply shift ahead of the shoulder season, typically in autumn, to keep the market in perfect balance.
'Instead, we expect a modest supply increase more in line with the cautious approach OPEC+ has demonstrated since reigning in global supply since the mega cuts were enacted in May 2020,' she added.
By Sibel Morrow