Oil prices increased on Wednesday with an anticipated fall in US crude inventories, signaling a recovery in oil demand despite virus-induced fears and supply worries ahead of the meeting of producers and allies of the Organization of Petroleum Exporting Countries (OPEC) on Wednesday.
International benchmark Brent crude was trading at $72.12 per barrel at 0718 GMT for a 0.68% increase after closing Tuesday at $71.63 a barrel.
American benchmark West Texas Intermediate (WTI) traded at $68.98 a barrel at the same time for a 0.70% rise after ending the previous session at $68.50 per barrel.
On late Tuesday, the American Petroleum Institute predicted a drop in US crude oil stockpiles of 4.05 million barrels, more than the market expectation of a fall of 2.8 million barrels.
A significant drop in inventories indicates an increase in crude demand in the US, the world’s largest oil consumer, assuaging market concerns over dwindling demand.
The markets are also focusing on the OPEC+ meeting on Wednesday when a boost in supply of a further 400,000 barrels per day (bpd) is expected.
The group, previously in the July meeting, had agreed to raise output by 400,000 bpd from August to December and extend its production cut agreement from April 2022 to December 2022.
However, prices came under pressure after Hurricane Ida forced producers on the northern US Gulf Coast to either completely close or partially evacuate many offshore platforms in the region where many oil majors, including bp, Shell, Chevron and BHP are located, halting production.
'We see a risk that the loss of US refinery demand will be greater and more prolonged than the loss of crude supply, which, depending on the extent of refinery shut-ins and power outages, could further weaken the flat price, the structure for WTI and potentially WTI-Brent further for both September and possibly October 2021,” Bjornar Tonhaugen, head of oil markets at Rystad Energy, said in a statement.
By Ebru Sengul Cevrioglu