A cross-examine jack operates at a well site leased by Devon Energy Production Co. near Guthrie, Oklahoma.
Nick Oxford | Reuters
Oil bounties edged higher on Wednesday after a steep fall in the previous session, supported by extended output cuts by OPEC and its join ups despite concerns that a slowing global economy could crimp demand.
An expected large draw in U.S. natural oil inventories also underpinned sentiment after a bigger-than-expected stocks fall in a private survey.
Brent crude futures for September distribution were trading up 36 cents, or 0.6%, at $62.76 a barrel by 0244 GMT.
U.S. crude futures for August were up 29 cents, or 0.5%, at $56.54 a barrel. Both benchmarks mow down more than 4% on Tuesday as worries about a slowing global economy overshadowed OPEC supply destine a chop ups.
The Organization of the Petroleum Exporting Countries and other producers such as Russia, a group known as OPEC+, agreed on Tuesday to elongate oil supply cuts until March 2020 as members overcame differences to try to prop up prices.
“The OPEC+ meeting registered the members sticking together in tough times, characterized by weakening global demand outlook, aiming for a more balanced oil call, despite clear market share implications,” said Amarpreet Singh, analyst at Barclays Commodities Research in a note.
“This is reassuring of oil prices, in our view, even as the market remains squarely focused on weak macro signals.”
Ahead of government matter due later on Wednesday, industry group the American Petroleum Institute (API) said that U.S. crude inventories fell by 5 million barrels at length week, more than the expected decrease of 3 million barrels.
The OPEC+ agreement to extend oil output cuts for nine months should pour down oil inventories in the second half of this year, boosting oil prices, said analysts from Citi Exploration in a note.
“Keeping cuts through the end of 1Q aims to avoid putting oil into the market during a seasonal low for demand and refinery makes, as well as providing time to assess the impacts of IMO 2020,” they said.
Still, signs of a global economic slowdown unearthing oil demand growth worried investors after global manufacturing indicators disappointed and the U.S. opened another trade effrontery first after threatening the EU with more tariffs to offset government aid to the aviation industry.
Barclays expects demand to breed at its slowest pace since 2011, gaining less than 1 million barrels per day year-on-year this year.
Morgan Stanley, meantime, lowered its long-term Brent price forecast on Tuesday to $60 per barrel from $65 per barrel, and said the oil make available is broadly balanced in 2019.
Crude prices were also capped by signs of a recovery in oil exports from Venezuela in June and expansion in oil production in Argentina in May.