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Following a near 6-month low, oil prices increased due to supply concerns

Image: Reuters Berita 24 English - Oil prices increased on Thursday as supply concerns led to a recovery from multi-month lows reached the p...

Image: Reuters

Berita 24 English - Oil prices increased on Thursday as supply concerns led to a recovery from multi-month lows reached the previous day as a result of sluggish gasoline demand indicated by U.S. statistics.

West Texas Intermediate (WTI) crude futures were recently up 49 cents, a 0.5 percent gain, at $91.15, while Brent crude futures increased 42 cents, or 0.4 percent, to $97.20 a barrel by 0250 GMT.

The previous session saw both benchmarks drop to their lowest levels since February as OPEC+ decided to increase its oil output target by 100,000 barrels per day (bpd), or about 0.1 percent of global oil demand, and U.S. data revealed that crude and gasoline stockpiles unexpectedly increased last week.

The Organization of the Petroleum Exporting Countries (OPEC) and its allies, which includes Russia, are referred to as OPEC+. OPEC+ has been increasing production in the past, but has had difficulty meeting targets because the majority of its members have already reached their maximum output capacity.

"OPEC+ decided to boost output in September by 100,000 barrels per day, a much smaller increase than in the preceding months. There are still supply issues in the global energy market "Leon Li, a market analyst at CMC Markets, stated.

WTI oil prices are "expected to vary," he continued, between $90 and $100 per barrel.

While Saudi Arabia may be reluctant to increase production at the expense of Russia, which is suffering from sanctions over the invasion of Ukraine that Moscow refers to as "a special operation," spare capacity is limited and the United States has pushed the group to increase output.

According to three delegates who attended the meeting, OPEC+ has reduced its prediction for the year's oil market surplus by 200,000 barrels per day (bpd) to 800,000 bpd.

"Because the prognosis for petroleum consumption keeps getting worse, it appears that OPEC+ is rejecting requests to increase output. The current global oil crisis is being faced by the entire world, and OPEC+ will not be of any assistance "Senior analyst at OANDA Edward Moya stated in a note.

"The short-term oil market will stay tight, therefore there shouldn't be much downside left in this situation. Even as the global economic slump deepens, crude prices should find stable support around the $90 level and subsequently rise toward the $100 level per barrel."

Rising concerns about an economic downturn in the United States and Europe, debt hardship in emerging market countries, and China's tough zero COVID-19 policy, the world's top oil importer, have all clouded the picture for oil demand.

According to the Energy Information Administration, U.S. crude oil inventories unexpectedly increased last week as exports decreased and refineries reduced their production. Gasoline stocks also showed an unexpected increase as demand decreased.

The Caspian Pipeline Consortium (CPC), which links Kazakh oil reserves with the Russian Black Sea port of Novorossiisk, however, supported prices on Thursday by claiming that supplies were drastically down without offering specific numbers.

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