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Oil Prices Edge Up on Supply Concerns after Drop to Near 6-Month Low

Oil Prices Edge Up on Supply Concerns after Drop to Near 6-Month Low

Thursday, 4 August, 2022 - 07:30
Pump jacks operate at sunset in Midland, Texas, US, February 11, 2019. REUTERS/Nick Oxford

Oil prices rose on Thursday as supply concerns triggered a rebound from multi-month lows plumbed in the previous session after US data signaled weak fuel demand.


Brent crude futures rose 10 cents, or 0.1%, at $96.88 a barrel at 0653 GMT, while West Texas Intermediate (WTI) crude futures was last up 21 cents, a 0.2% gain, at $90.87.


Both benchmarks fell to their weakest levels since February in the previous session after US data showed crude and gasoline stockpiles unexpectedly surged last week and as OPEC+ agreed to raise its oil output target by 100,000 barrels per day (bpd), equal to about 0.1% of global oil demand.


The Organization of the Petroleum Exporting Countries (OPEC) and allies including Russia, known as OPEC+, have been previously increasing production but have struggled to meet targets as most members have already exhausted their output potential.


"OPEC+ agreed to increase production by 100,000 barrels per day in September, far lower than previous months' production. The global energy market still faces supply shortages," said Leon Li, an analyst at CMC Markets, according to Reuters.


He added that WTI oil prices are "likely to oscillate" between $90 and $100 a barrel.


Oil's demand outlook remains clouded by rising fears of an economic slump in the United States and Europe, debt distress in emerging market economies, and a strict zero COVID-19 policy in China, the world's largest oil importer.


US crude oil inventories had also rose unexpectedly last week as exports fell and refiners lowered runs, while gasoline stocks also posted a surprise build as demand slowed, the Energy Information Administration said.


Supporting prices on Thursday, however, the Caspian Pipeline Consortium (CPC), which connects Kazakh oil fields with the Russian Black Sea port of Novorossiisk, said that supplies were significantly down, without providing figures.


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