Investing.com — Oil prices edged lower on Thursday as investors weighed a possible extension of OPEC+ supply cuts and concerns about weakening demand.
At 2:30 PM ET (18:30 GMT), the price rose 0.1% to $78.95 per barrel, while rising 0.3% to $83.67 per barrel after hitting a seven-week low on Wednesday reaches.
OPEC+ to extend cuts?
OPEC and its allies could extend their voluntary oil production cuts of 2.2 million barrels per day beyond June, Reuters reported on Thursday, citing sources.
OPEC+, which includes the Organization of the Petroleum Exporting Countries, Russia and other non-OPEC producers, will meet again in early June and has yet to begin formal talks, the news agency said, but the tracks indicated they could maintain their position. cuts if demand does not pick up.
The group has made a series of production cuts since late 2022 due to rising production from the United States and other non-member producers, and concerns about demand as major economies struggle with high interest rates.
The country is currently cutting production by 5.86 million barrels per day, equivalent to about 5.7% of global demand, but voluntary cuts of just over 2 million barrels per day by some members are set to expire at the end of June.
The dollar is falling as the Fed plays down speculation about rate hikes
Oil prices were helped by a decline in the dollar earlier Thursday, with the greenback falling from a six-month high on Wednesday after Fed Chairman Jerome Powell said the central bank’s next rate hike will likely be a cut, although the timing of such an interest rate cut is likely. a move remained uncertain.
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Still, with higher interest rates likely to persist for the longer term, concerns about the economic impact on oil demand remain front and center even as the U.S. driving season approaches.
Crude oil, like many other commodities, is priced in dollars, so a weaker dollar benefits crude oil demand by making oil cheaper for international buyers.
Oil prices hit by US stockpiles, production peak
Crude oil markets are on course for big losses this week after official data on Wednesday showed US oil production was substantially higher than expected at 7.3 million barrels in the week to April 26. Gasoline inventories also grew, while distillates saw minimal declines.
The inventory, which was preceded by data showing U.S. production rising above 13 million barrels per day in March, raised expectations that oil markets were not as tight as initially thought.
Such a scenario does not bode well for oil prices.
Mediocre index figures from purchasing managers of top importer China also weighed on oil prices this week.
The focus was also on ceasefire negotiations between Israel and Hamas, with any progress on that front lowering the risk premium for oil markets.
(Peter Nurse, Ambar Warrick contributed to this article.)
