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Oil prices settle higher, but gains kept in check by surprise rise in US supplies By Investing.com

Oil surges as speculation over OPEC cut outweighs China concerns

Investing.com– Oil prices settled slightly higher Wednesday, as traders weighed a surprise increase in weekly inventories against ongoing geopolitical tensions that threaten to disrupt global supplies.

At 14:30 ET (18:30 GMT), expiring in June rose 0.3% to $85.43 a barrel, and rose 0.5% to $85.43 a barrel.

US crude supplies in surprise increase

U.S. increased by about 3.2M barrels in the week ended Mar. 29, confounding expectations for a decline about 300,000 barrels.

Gasoline inventories, one of the products that crude is turned into, decreased by roughly 4.3M barrels, much more than expectations for a 820,000 barrels decline while distillate stockpiles fell by 1.3M barrels, compared to expectations for a drop of 604,000 barrels.

The mixed petroleum report comes as U.S. oil output growth is forecast to slow, the EIA said Tuesday, after cutting its forecast for 2024 domestic production to 120,000 barrels per day to 170,000 bpd.

OPEC+ keeps output levels unchanged

OPEC+ ministers made no fresh policy recommendations in a meeting earlier Wednesday, as a ministerial committee of the Organization of the Petroleum Exporting Countries and allies, led by Russia, met to review the market and members’ implementation of output cuts.

OPEC+ members last month agreed to extend voluntary output cuts of 2.2 million barrels per day until the end of June to support the market.

This tightening of global supply is occurring amid fears of a broader conflict in the Middle East. Iran vowed retaliation against Israel for strikes on the Iranian embassy compound in Damascus, presenting the possibility of more supply disruptions in this oil-rich region.

Elsewhere, oil prices had risen earlier this week after Mexico said it will also cut its oil exports, and Ukraine attacked Russia’s third-largest oil refinery earlier this week, although Reuters reports said the attack did not cause critical damage.

But the strike comes in the wake of several such attacks against Russia’s energy infrastructure – a trend that could potentially further stymie oil exports from Moscow.

Expectations of tighter supplies helped oil prices rise past a stronger dollar and growing uncertainty over the path of U.S. interest rates.

BofA lifts its oil price forecasts

Bank of America Global Research has raised its 2024 and WTI oil price forecasts, citing escalating geopolitical tensions and the OPEC+ producer group maintaining supply curbs.

The bank now expects Brent and WTI crude prices this…

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