Crude Rises Amid OPEC+ Delays and US Inventory Draw

Petroleum Price

• Oil prices edged up in early trading on Friday** as investors weighed a significant withdrawal from U.S. crude inventories and a delay in production hikes by OPEC+ producers against mixed U.S. employment data.
• Brent crude futures rose 19 cents, or 0.26%, to $72.88 at 0010 GMT, while U.S. West Texas Intermediate crude futures were up 22 cents, or 0.32%, to $69.37. MCX crude oil prices opened at 5829 with a gain of 0.33%.

Petroleum Demand and Supply

• Crude stockpiles fell by 6.9 million barrels to 418.3 million barrels last week, compared with analysts’ expectations from a Reuters poll predicting a 993,000-barrel draw.
• Also lifting prices, OPEC+ agreed to delay a planned oil production increase for October and November. The producers' group stated on Thursday that further pauses or reversals of hikes could occur if necessary.
• Recent U.S. economic data provided some relief about the economy's health to a market seeking clues about potential Federal Reserve interest rate cuts. The U.S. services sector remained steady in August, but employment gains slowed, indicating a softening labor market.
• Mixed signals from job market indicators weighed on the dollar, which lingered near a one-week low ahead of crucial monthly payrolls data due later on Friday.

Petroleum News

• OPEC+ agreed to delay a planned oil output increase for October and November after crude prices hit a nine-month low, three sources from the producers’ group told Reuters on Thursday.
• Oil prices have been falling across asset classes due to concerns about a weak global economy and soft data from China, the world’s largest oil importer.
• “One of the sources mentioned a two-month delay,” which helped lift oil prices by over $1 a barrel. Brent futures traded at $73.72 by 1508 GMT after hitting their lowest point this year on Wednesday.
• OPEC+’s planned hike was 180,000 barrels per day (bpd), a small portion of the 5.86 million bpd in output it is withholding, which represents around 5.7% of global demand. This is being done to support the market amid demand uncertainties and rising supply outside the group.
• Last week, OPEC+, consisting of the Organization of the Petroleum Exporting Countries and allies led by Russia, was set to proceed with the increase.

Expert Opinion

• Markets seem underwhelmed by the OPEC+ decision. On the demand side, the weakening U.S. dollar provided some support, as it reached a one-week low due to mixed job market indicators. A weaker dollar makes oil cheaper for buyers using other currencies.
• Nevertheless, Brent settled at a more than one-year low, as concerns over U.S. and Chinese demand overshadowed support from a large U.S. crude inventory withdrawal and OPEC+’s decision to delay output increases.