Oil prices rose on Thursday, extending a sharp rebound from the prior session against the backdrop of a potential escalation of tensions in the Middle East. The heightened tensions fueled fears that a bigger conflict in the region could disrupt oil supply, potentially tightening global markets.
OPEC+ meeting in focus
Attention was also focused on an upcoming meeting of the Organization of the Petroleum Exporting Countries and allies (OPEC+). Investors were looking for cues on the cartel’s plans for production.
Falling U.S. inventories support prices
Oil prices found support from data showing that U.S. crude inventories shrank more than expected for a fifth consecutive week, as fuel demand remained strong during the peak summer travel season. Brent oil futures expiring in October rose 0.5 percent to $81.24 a barrel, while West Texas Intermediate crude futures increased 0.6 percent to $77.30 a barrel by 22:51 ET (02:51 GMT).
Read more: Oil prices jump on robust U.S. fuel demand, inventory draws
Expectations for OPEC+ meeting
The Joint Ministerial Monitoring Committee of OPEC+ is scheduled to hold an online meeting later on Thursday. Media reports preceding the meeting suggested that the cartel would not make changes to its production levels, despite a recent slump in oil prices that pushed them to near two-month lows. However, major producers Saudi Arabia and Russia are expected to further downplay plans to begin scaling back production cuts.
China concerns limit gains
Bigger gains in oil prices were held back by persistent concerns over the economic recovery in top importer China, especially after a series of weak purchasing managers’ index (PMI) readings this week. Caixin PMI data showed an unexpected contraction in China’s manufacturing sector, aligning with a government PMI reading from the previous day. These weak data points have ramped up calls for more stimulus measures from Beijing, which has so far provided few concrete details on plans to support the economy.
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