Oil prices edged higher from four-month lows on Wednesday, supported by a U.S. jobs report that bolstered the case for a potential September interest rate cut. Meanwhile, markets weighed OPEC+’s plans to begin easing some output cuts later this year.
Brent crude futures rose 39 cents, or 0.5%, to $77.91 a barrel by 1241 GMT. Similarly, U.S. West Texas Intermediate crude futures increased 39 cents, or 0.5%, to $73.64 a barrel.
Both benchmarks had fallen more than 1% on Tuesday, hitting their lowest settlement levels since early February, following a $3 per barrel decline on Monday. This drop came after the Organization of the Petroleum Exporting Countries (OPEC) and its allies announced plans to boost supply in the fourth quarter, despite recent indications of slowing demand growth.
“The abundant supply picture at present undoubtedly is generating queasiness even from those not in the perennial OPEC-skeptic camp,” said Helima Croft, head of commodities research at RBC Capital, in a market note.
However, Saudi Arabian energy minister Prince Abdulaziz bin Salman indicated that OPEC+ could pause or reverse the planned cuts if demand is insufficient to absorb the increased supply.
Oil prices received some support from data showing U.S. private payrolls rose less than expected in May, with April’s data also revised downward. This followed Tuesday’s report that U.S. job openings fell more than anticipated in April, potentially aiding the Federal Reserve’s inflation fight and supporting the case for an interest rate cut.
“Yesterday’s U.S. job data hints at a softer labor market and a potential September rate cut from the Fed,” said Tamas Varga, an analyst at PVM Oil.
U.S. Energy Secretary Jennifer Granholm suggested that the United States might accelerate the replenishment of the Strategic Petroleum Reserve, adding that she believes the global oil market is well-supplied.
U.S. crude stocks rose by more than 4 million barrels in the week ended May 31, according to sources citing American Petroleum Institute figures, contrary to analysts’ expectations of a 2.3 million barrel decline. Gasoline stocks also increased by over 4 million barrels, double the anticipated build.
“Renewed inventory draws are needed to push oil prices higher,” said Giovanni Staunovo, an analyst at UBS.
The U.S. Energy Information Administration is set to publish official stockpile data at 1430 GMT on Wednesday. This data is closely watched as it reflects fuel usage around the Memorial Day holiday, marking the start of the U.S. driving season.
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