London, March 6, 2024 – Oil prices rebounded slightly on Wednesday after four days of declines as signs of supply tightness amid output cuts by major producers overrode demand concerns in China and the U.S., the world’s two biggest crude consumers.
Brent crude futures were up 53 cents, or 0.65%, to $82.57 a barrel at 0922 GMT, while U.S. West Texas Intermediate crude futures rose 64 cents, or 0.82%, to $78.79 a barrel, after declining the past two days.
China’s 2024 economic growth target of around 5% set on Tuesday lacked big-ticket stimulus plans to bolster its struggling economy, raising concerns of sluggish oil demand growth.
The market “specifically was hoping to see further fiscal expansion to help meet the growth target,” said Tony Sycamore, an analyst at IG in Sydney.
Eyes are now on U.S. Federal Reserve Chair Jerome Powell’s semi-annual monetary policy testimony to Congress on Wednesday and Thursday and Friday’s U.S. employment data, Sycamore said.
Friday’s U.S. non-farm payrolls data is expected to show an increase of 200,000 jobs in February after surging 353,000 in January, according to a Reuters survey of economists.
Powell’s comments and the jobs data could provide clearer direction on U.S. interest rates, and signs of a Fed cut would be seen as positive for the economy and oil demand.
Oil prices were lifted by the announcement on Sunday that the Organization of the Petroleum Exporting Countries and its allies (OPEC+) extended output cuts of 2.2 million barrels per day until the end of the second quarter.
The extension has created some supply tightness, particularly in Asian markets, along with the disruption in oil tanker movements as a result of the Red Sea attacks by the Houthi militia in Yemen that is tying up barrels in transit.
That physical tightness was apparent as Saudi Arabia, the world’s biggest oil exporter, announced on Wednesday slightly higher prices for April crude sales to Asia, its biggest market.
The first of this week’s two U.S. inventory reports, from the American Petroleum Institute industry group, showed U.S. crude stocks rose by 423,00 barrels in the week ended March 1, market sources said, much smaller than the increase of 2.1 million barrels, expected by analysts in a Reuters poll.
Official data from the U.S. Energy Information Administration is due on Wednesday at 10:30 a.m. ET (1530 GMT). (Reuters)
