Oil Drifts Higher After U.S. Inventories, OPEC Hike Drive Steep Losses

By Ambar Warrick

Investing.com-- Oil prices inched higher in early trade on Thursday, recouping some losses from the prior session after a surprise rise in U.S. inventories and a mild supply hike by the OPEC+ drove prices to an over five-month low.

As of 2003 ET (0003 GMT), U.S. Crude West Texas Intermediate futures rose 0.7% to $91.30 a barrel, while Brent Oil Futures traded 0.3% higher at $97.4.

Prices had slumped as much as 3.4% on Wednesday after government data confirmed that U.S. crude stockpiles unexpectedly rose by over 4 million barrels last week. The rise was largely telegraphed by data from the American Petroleum Institute on Tuesday.

WTI futures briefly hit a low of $90.41- their weakest level since late February.

The rise in inventories confirms a recurring theme seen in recent months- that crude demand is on the lam this year. Weak manufacturing PMIs from China, Europe and the United States had also slammed oil prices earlier in the week.

WTI and Brent prices have slipped 8% and 13% so far this week, and are headed for one of their worst weeks this year.

The Organization of Petroleum Exporting Countries and its allies agreed to raise supply by 100,000 barrels per day on Wednesday, following U.S. pressure for a hike. But the hike- which is about 0.1% of global demand, is the lowest ever production increase by the organization, and is widely expected to be inconsequential for prices.

After surging to multi-year highs during supply shocks caused by the Russia-Ukraine war, oil prices have since consolidated sharply in the face of waning demand. With major world economies on the cusp of a recession, the trend is likely to continue for the remainder of 2022.

But a drop in oil prices is also expected to eventually help bring down runaway inflation. Fuel prices have been among the biggest contributors to rising inflation this year.