Oil Prices Surge as US Inventories Decline: OPEC Plus Holds Production Cuts

rose Oil prices On Wednesday, after US oil storage data showed a bigger-than-expected decline in crude inventories as refiners ramped up production ahead of the summer.

Brent crude futures rose 31 cents, or 0.37 percent, to $83.47 a barrel by 18:00 GMT, while US West Texas Intermediate crude futures rose 50 cents, or 0.64 percent, to $78.88 a barrel .

Oil prices are rising

US crude inventories fell 1.4 million barrels to 459.5 million barrels in the week to May 3, 2024, according to the US Energy Information Administration, which is slightly more than analysts expected.

“Strong refining and export activity has pulled down a modest boost in crude oil inventories, which has helped offset some of last week’s sharp rise,” said Matt Smith, senior oil analyst at Kpler.

However, the US Energy Information Administration expects global oil demand growth to slow this year, according to a forecast report.

A stronger US dollar has reduced crude oil prices, and a strong dollar weakens demand for oil by making it more expensive for investors holding other currencies.

The effect of the increase in Gaza on oil

Hopes for a cease-fire​​​​​​​​in Gaza put some pressure on oil prices in recent trading sessions, and some analysts believe that the risk level on oil decreased at the same time.

For his part, BVM oil analyst John Evans said: “Removing the current geopolitical pressure will leave the market looking at a world of sustained inflation in the United States, offset by high interest rates that not only keeps the US dollar higher, but also. also doing any kind of… than trading more expensive goods.”

The United States believes that negotiations on a cease-fire in Gaza should be able to close the gaps between Israel and Hamas.

Morgan Stanley analysts said they see the geopolitical risks to oil prices dissipating as fears of an escalation of the conflict.

OPEC Plus and the oil market

The decline in expectations also influenced new production cuts from the Organization of the Petroleum Exporting Countries and its allies OPEC Plus during the policy meeting on June 1 on the markets.

Russian Deputy Prime Minister Alexander Novak said on Tuesday that there are no talks on increasing oil production with OPEC Plus. This followed a previous statement in which the Russian minister revealed that OPEC Plus could consider the option of increasing production.