Oil prices have increased after data revealed a decline in US crude stocks, ahead of government data due later during the day.
Brent crude futures LCOc1 for September delivery increased 49 cents at $62.89 a barrel, while US crude futures for August CLc1 rose 39 cents at $56.64 a barrel, Reuters reported.
Industry group American Petroleum Institute (API) reported a fall in US crude stocks by five million barrels last week, which is more than the expected decrease of three million barrels.
The Organization of the Petroleum Exporting Countries (OPEC) and Russia, a group known as OPEC+, agreed to extend supply cuts for nine months until March 2020.
Olivier Jakob of Petromatrix was quoted by Reuters as saying: “We had a pretty sharp correction yesterday so after that, a little rebound is expected. Globally, the market is concerned about oil demand growth potential.
“Extending the cut by six or nine months, it doesn’t really matter if the level stays the same. If you (OPEC) really wanted to target stock levels, you would need deeper cuts but Saudi Arabia has already gone beyond its cut target.”
The OPEC+ agreement should draw down oil inventories during the second half of 2019 which is expected to increase oil prices, according to Citi Research analysts. However investors are worried over signs of a global economic slowdown that is hitting oil demand growth.
Barclays expects growth in demand at its slowest pace since 2011, gaining less than one million barrels per day year-on-year in 2019.