Oil prices edge up as OPEC+ output cuts, U.S. inventories brighten outlook

Oil&Gas Materials 5 April 2023 09:30 (UTC +04:00)
Oil prices edge up as OPEC+ output cuts, U.S. inventories brighten outlook

Oil prices rose on Wednesday, boosted by expectations of U.S. crude inventory declines as well as the latest output cut targets set by the OPEC+ producer alliance, Trend reports with reference to Reuters.

Brent crude futures gained 45 cents, or 0.5%, to $85.39 a barrel by 0352 GMT. West Texas Intermediate U.S. crude was up 40 cents, or 0.5%, to $81.11 a barrel.

The rises came as an industry report showed U.S. crude stocks fell by about 4.3 million barrels in the week ended March 31. The official inventory report by the U.S. Energy Information Administration is due at 1430 GMT on Wednesday.

Continuing to add support were the latest targets to reduce supplies set by the Organization of Petroleum Exporting Countries (OPEC) and allies including Russia, a group known as OPEC+.

"Energy traders are still digesting the OPEC+ surprise production cut and any news that suggests the oil market will remain even tighter is going to send prices even higher," said Edward Moya, an analyst at OANDA.

The OPEC+ plan would bring the total volume of cuts by the group to 3.66 million barrels per day (bpd), including a 2 million bpd cut last October, equal to about 3.7% of global demand.

In Asia, data showed Japan's service sector grew in March at the fastest rate in more than nine years.

However, weak manufacturing activity in the U.S. and China - the two biggest oil consumers - have kept oil prices from moving up further, despite the prospect of tighter supply following the OPEC+ cuts.

Traders will be looking for cues on broader economic trends from the U.S. non-farm payrolls data due later this week, analysts say.

"The U.S. non-farm payroll will probably be the most influential economic data that drives the broad market’s movements," said Tina Teng, an analyst at CMC Markets.