Oil prices edged up after plunging to multi-month lows previously as major producers may delay an output increase planned for next month and U.S. inventories fell, though the gains were limited by persistent demand concerns.
Brent crude futures for November rose 15 cents, or 0.1 per cent, to US$72.85 at 0402 GMT after dropping 1.4 per cent in the previous session to their lowest close since June 27, 2023. U.S. West Texas Intermediate crude futures for October were up 15 cents, or 0.22 per cent, to US$69.35 after dropping 1.6 per cent on Wednesday to the lowest settlement since Dec. 11.
"Pessimistic sentiments in oil markets seem to ease after robust API data and news of OPEC+ reconsidering output jump, surfaced and boosted hopes," said Priyanka Sachdeva, senior market analyst at Phillip Nova.
The Organization of the Petroleum Exporting Countries and allies led by Russia, known as OPEC+, is discussing delaying its oil output increase scheduled to start in October after prices have tanked, four sources from the producer group told Reuters on Wednesday.
Last week, OPEC+ was set to proceed with its 180,000 barrels-per-day (bpd) output hike in October, part of a plan to gradually unwind its most recent cuts of 2.2 million bpd.
But the potential end to a dispute halting Libyan exports and soft Chinese demand has pushed the group to reconsider.
Prices on Thursday also found support after American Petroleum Institute (API) data showed U.S. crude oil and fuel inventories fell last week, according to market sources citing the API figures on Wednesday.
"API numbers released overnight were constructive," said ING analysts in a client note, adding that if official government data shows the same decline later it could be "the largest weekly drop since June."
The API figures showed crude stocks fell by 7.431 million barrels in the week ended Aug. 30, compared with analysts' expectation in a Reuters poll of a 1 million barrel draw.
Weekly U.S. oil stocks data from the Energy Information Administration (EIA) is due on Thursday at 1430 GMT.
Still, the persistent demand worries capped price gains.
Data published over the weekend by the Chinese government revealed that manufacturing activity in the world's top oil consumer sank to a six-month low last month as factory gate prices tumbled and owners struggled for orders.
"Economically, the slowdown in the Chinese economy and weak oil demand there, which has surprised some in the market, have damaged market confidence," Citi analysts said in a note.
"Fundamentally, a relatively looser market awaits. Refineries entering into turnaround season would reduce offtake, the end of Middle East summer burn should mean more oil produced would be freed up for exports, and weak refining margins would threaten more refinery run cuts that reduce oil offtake."