Oil prices climbed in early Asian trading on Wednesday, driven by the expectation of a reduction in U.S. crude inventories and the latest output cut targets from OPEC+. Brent crude futures increased by 38 cents to reach $85.32 a barrel, while West Texas Intermediate U.S. crude saw an uptick of 33 cents to $81.04 a barrel.
The American Petroleum Institute’s industry report, which revealed that U.S. crude stocks had declined by roughly 4.3 million barrels during the week ending March 31, provided further impetus for the rise in oil prices. In addition, Japan’s service sector demonstrated strong growth in March, reaching its highest rate in over nine years, according to Reuters News.
Gasoline inventories fell by around 4 million barrels, while distillate stocks declined by approximately 3.7 million barrels, according to market sources who requested anonymity because they were not authorised to speak to the media.
The official inventory report by the Energy Information Administration, the statistical arm of the U.S. Department of Energy, is due at 1430 GMT on Wednesday.
The latest targets set by the Organization of Petroleum Exporting Countries (OPEC) and allies including Russia, a group known as OPEC+, also helped oil prices. The OPEC+ plan would bring the total volume of cuts by the group to 3.66 million bpd, including a 2 million-barrel cut last October, equal to about 3.7% of global demand.
Keeping oil prices from moving higher were concerns about demand, with U.S. job openings in February falling to the lowest level in nearly two years and U.S. manufacturing activity in March slumping. Weak manufacturing activity in China last month also added to crude oil demand concerns.