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Oil prices rebounded on Thursday as concerns over tightening oil supply gained ground over heightened demand fears caused by a rise in US crude stockpiles.
International benchmark crude Brent traded at $92.48 per barrel at 9.50 a.m. local time (0650 GMT), a 0.65% gain from the closing price of $91.88 a barrel in the previous trading session on Wednesday.
The American benchmark West Texas Intermediate (WTI) traded at the same time at $89.14 per barrel, up 0.70% from the previous session’s close of $88.52 per barrel.
Investors awaited monthly US inflation data and crude oil stocks on Wednesday to get a sense of demand in the world’s top crude oil-consuming country.
Data from the Bureau of Labor Statistics revealed the annual inflation rate in the US reached 3.7% in August, marking growth for a second consecutive month.
Food prices rose by 4.3% in August on an annual basis, while energy items posted a 3.6% decline, the official figures showed.
According to analysts, the bearish data, with inflation above expectations, may pave the way for another interest rate hike at the Fed’s November or December meetings.
The demand outlook became even more ambiguous as the Energy Information Administration (EIA) reported that US commercial crude oil stockpiles climbed by 4 million barrels last week, exceeding the American Petroleum Institute’s forecast of 1.2 million barrels.
Gasoline inventories also increased by 5.6 million barrels to 220.3 million barrels over the same period.
Despite this, crude oil prices rebounded to 10-month highs as investors remained concerned about tightening global oil supplies, particularly after the US Energy Information Administration (EIA) warned of an expected fall in global oil stockpiles.
The agency said global oil stocks are likely to shrink as a result of Saudi Arabia’s decision to prolong its voluntary 1 million barrel-per-day (bpd) production cut through the end of this year, putting upward pressure on oil prices.
“Even if the two producers were to relax their curbs in early 2024, it will leave oil inventories severely depleted,” according to Daniel Hynes, a commodity strategist at Australia and New Zealand Banking Group.
