Oil prices increased on Thursday, driven by speculation that the OPEC+ group might delay planned production increases. This potential shift has heightened concerns about supply constraints, further boosting oil prices. The ongoing fears of a recession in the US, coupled with anticipated interest rate cuts from the Federal Reserve, have also contributed to the upward trend. Additionally, data indicating a drop in US crude oil inventories has played a role in supporting the price rise, as reported by Anadolu Agency.
Brent crude, the international benchmark, saw a 0.55% increase, reaching $73.02 per barrel, up from the previous session’s $72.62. Similarly, the US benchmark West Texas Intermediate (WTI) rose by 0.47%, closing at $69.19 per barrel, compared to the previous session’s $68.86.
There are growing expectations that OPEC+—which includes OPEC members and some non-OPEC oil-producing countries—may push back the planned production increase set for October. This speculation has fuelled concerns among market participants, prompting further price rises.
Additionally, the prospect of a faster-than-expected economic slowdown in the US has reinforced the upward momentum in oil prices. Market estimates suggest the Federal Reserve will likely cut interest rates by 100 basis points by the end of the year, with a 45% chance of a 50 basis point cut in September. These expectations have further supported oil prices, as rate cuts would likely weaken the US dollar, increasing demand for oil.
At the same time, the US dollar index fell slightly by 0.10%, reaching 101.27, which could also help drive demand for oil. Furthermore, data from the American Petroleum Institute (API) revealed a 7.4 million-barrel decline in US crude oil inventories, surpassing the market expectation of a 900,000-barrel decrease. This significant drop in crude reserves suggests stronger domestic demand, adding to the price support. Should the Energy Information Administration (EIA) confirm this decline later in the day, prices may continue to rise.
Union Jack Oil plc (LON:UJO) is an oil and gas company with a focus on onshore production, development, exploration and investment opportunities within the United Kingdom and the United States of America hydrocarbon sector.
