Crude oil prices were up earlier today but were still heading for a loss even after the U.S. Energy Information Administration reported a weekly decline in inventories and OPEC+ said it would delay its rollback of production cuts by two months.
The EIA reported an estimated inventory decline of 6.9 million barrels for the week to August 30 on Thursday, which pushed prices higher for a while but did not offset earlier losses.
Also on Thursday, media reported that OPEC+ had decided to delay its potential partial reversal of production cuts by two months. Reuters cited three unnamed sources from the group as saying the decision was made after prices hit the lowest in nine months. Original plans were to bring back 180,000 bpd to global production beginning in October, depending on market conditions.
Meanwhile, the demand side remained dominant among traders as pessimism about Chinese growth persisted.
"We see the OPEC+ unwind delay, ongoing geopolitics, and financial positioning providing price support at $70 to $72 Brent," Citi analysts said as quoted by Bloomberg. The publication also noted signs of weakening demand for fuels in two of the world's biggest markets: China and India.
"The gasoline market would be capable of cratering crude oil even if the OPEC+ chaos was not leaning on (the) price. If you don't need the gasoline, you don't need the crude oil to make gasoline," Mizuho energy futures head Bob Yawger told Reuters.
In further bearish news for oil, Libya's two main political factions were reported to be close to reaching a deal on the appointment of a new governor of the country's central bank, which would put an end to oil field shutdowns that took 700,000 bpd of Libyan crude off the market.
Analysts at Jefferies noted, however, that OPEC+'s decision to delay the rollback of the cuts would tighten inventories by between 100,000 bpd and 200,000 bpd in the final quarter of the year.
By Irina Slav for Oilprice.com
Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry. More