Market News

Yongchang Chin and Jack Wittels

(Bloomberg) -- Oil inched higher, with OPEC+ close to agreement on postponing a planned production increase.

Brent traded near $73 a barrel, a shallow rebound after falling in the previous session to its lowest since last year. Oil markets are also digesting a sizeable 7.4 million barrel drop in US crude inventories reported by the American Petroleum Institute, with official government figures due later Thursday.

Key members of the OPEC+ coalition likely won’t go ahead with a scheduled hike of 180,000 barrels a day in October, according to delegates. That’s against a backdrop of falling prices in recent days amid weak economic data from China and the US, the top two consumers. Libya has also taken a tentative step toward easing a deadlock that’s led to the halt of much of the nation’s oil production.

“Western-world and Chinese demand is rather stagnant, production is expanding particularly in the Americas,” said Norbert Rücker, head of economics and next generation research at Julius Baer. “The combination of these factors suggests swelling supplies looking ahead towards year-end and into next year.”

Widely watched futures timespreads have also weakened. Brent’s nearest contract is trading at a premium of $0.49 a barrel to the next closest contract. The marker, known as the prompt spread, settled above $1 a barrel for most of last week.

Traders are particularly focused on output by the Organization of Petroleum Exporting Countries and its allies.

“Unwinding the voluntary cuts as planned would create a surplus of nearly 1 million barrels a day in 2025, while holding off would leave a small deficit,” HSBC said in a Sept. 4 report. “Supporting the oil market for a year longer by extending the cuts again would be a pyrrhic victory for OPEC+, as it would further entrench its loss of market share.”