Oil prices rise amid indications of increased demand from Europe and China, coupled with a reduction in US production. Brent crude futures increased by 37 cents a barrel, representing a 0.6% rise, reaching $62.52 a barrel by 1215 GMT. Meanwhile, U.S. West Texas Intermediate crude stood at $59.53 a barrel, up by 44 cents, or 0.74%. On Wednesday, oil prices experienced an uptick, driven by indications of declining production in the U.S. and an increase in demand from Europe and China, as buyers stepped in following a drop to new lows earlier in the week. Brent crude futures increased by 37 cents a barrel, representing a rise of 0.6%, reaching $62.52 a barrel by 1215 GMT. Meanwhile, U.S. West Texas Intermediate crude stood at $59.53 a barrel, up by 44 cents, or 0.74%.
Both benchmarks experienced a significant decline, reaching a four-year low following OPEC+’s decision to accelerate output increases. This move has heightened fears of oversupply, coinciding with U.S. tariffs that have raised concerns regarding demand. Nonetheless, the decline in oil prices observed in recent weeks has led certain U.S. energy companies, such as Diamondback Energy and Coterra Energy, to declare plans to reduce the number of active rigs. Analysts suggest that this strategy is likely to elevate prices in the long run by curtailing production.
According to ANZ bank senior commodity strategist Daniel Hynes, the latest announcements indicated that output is expected to weaken in the forthcoming months. “We cautioned last month that decreasing prices and diminishing drilling activity were heightening the risk of a decline in U.S. oil output.” Crude stocks experienced a decline of 4.5 million barrels in the week concluding on May 2, according to market sources referencing figures from the American Petroleum Institute on Tuesday.
U.S. government data regarding stockpiles is scheduled for release at 10:30 a.m. ET. According to analysts surveyed by Reuters, the consensus anticipates an average decrease of 800,000 barrels in U.S. crude oil inventories for the previous week. Prices also received support from indications of improving demand. During the May Day celebration, consumers in China exhibited an uptick in spending as market participants resumed activities following the five-day holiday.
In Europe, companies are anticipated to announce a growth of 0.4% in first-quarter earnings, marking an improvement from the 1.7% decline that analysts had projected just a week prior. The Federal Reserve is anticipated to maintain interest rates at their current levels on Wednesday, given the turbulence in the economic outlook caused by tariffs.