Oil rose on Wednesday, extending its gains for a second session as planned supply disruptions by the world’s biggest oil exporters and hopes for higher demand in the developing world offset broader economic concerns globally.
Brent futures were up 6 cents to $79.46 a barrel as of 0356 GMT, and West Texas Intermediate (WTI) crude was up 6 cents to $74.88 a barrel.
Despite all the ongoing growth concerns, crude prices are rising as expectations for the oil market to remain tight.
Last week, the biggest producer Saudi Arabia promised to extend the production cut of 1 million bpd in August, while Russia will cut exports by 500,000 bpd.
Demand would exceed supply at 100,000 bpd in 2023 and 200,000 bpd in 2024, according to the US EIA forecast on Tuesday.
According to the International Energy Agency (IEA), the oil market should remain tight in the second half of 2023, with reference to the strong demand from China, and developing countries, and the supply cuts recently announced by the biggest exporters Saudi Arabia and Russia.
The short-term outlook for crude demand s not expected to be bad, as the summer and holiday seasons naturally favor fuel consumption.
However, market sources said, citing industry figures from the American Petroleum Institute (API), U.S. crude inventories increased by nearly 3 million barrels in the week to July 7. However, some analysts had expected only a 500,000-barrel increase in crude oil inventories.
If confirmed by data from the Energy Information Administration (EIA) later Wednesday, this would be the first crude stock increase in four weeks, compared to a 3.3 million barrel increase and a five-year average of 6.9 million declines in the same week last year.
Investors had been waiting for US inflation data on Wednesday for clues on the interest rate outlook.
The market has priced in a 92% probability of a 25 basis point hike at the end of this month. However, higher rates could slow economic growth and reduce oil demand.
