- OPEC+ may reduce output to support oil prices.
- Iran’s nuclear program deal is at a standstill.
- Oil prices increase after a drop in US crude oil inventories.
The possibility of output reduction, the partial suspension of a US refinery, and growing supply fears due to delays in Russian exports drove up crude oil (CL) futures prices on Thursday.
By 04:00 GMT, Brent crude had increased by 59 cents, or 0.6%, to $101.81 per barrel, while US West Texas Intermediate crude had increased by 42 cents, or 0.4%, to $95.31 per barrel.
After the Saudi energy minister hinted that the Organization of the Petroleum Exporting Countries and its partners, known as OPEC+, may reduce output to support prices, both crude oil benchmark contracts reached three-week highs on Wednesday.
Additionally, efforts to reach a deal on Iran’s nuclear program are still at a standstill, raising doubts about any resumed exports.
According to OPEC sources who spoke to Reuters, should Tehran reach a nuclear agreement with major powers, any cuts by OPEC+ are expected to coincide with the return of Iranian oil to the market.
The largest oil consumer in the world, the United States, said on Wednesday that BP had shut down specific units at its Whiting, Indiana, refinery as a result of an electrical fire. The 430,000 barrel per day plant is a significant fuel provider to Chicago and the central United States. This is bound to cause a tight supply in the US.
The upward pressure on prices was further increased by declining US crude and product stocks. In the week ending August 19, oil stockpiles dropped by 3.3 million barrels or more than double what analysts had predicted in a Reuters poll for a 933,000-barrel decline.
Gasoline stocks in the United States decreased less than anticipated during the week, prompting concerns that domestic demand may still be in trouble. The outlook for oil demand is also anticipated to be negatively impacted by worries about a possible US recession, particularly as US interest rates continue to increase.
The net speculative prices for crude oil in the US have been downtrend for the past few months. In light of recent recession worries, it is understandable why investors are reducing their positions. A pivot in the Fed’s monetary policy might be among the few things that could reverse this trend.