Oil edged higher for a third straight day on Wednesday after industry data showed U.S. oil stocks grew less than expected and the U.S. sharply cut its forecast for the country’s oil output growth, easing concerns about potential oversupply.
Brent crude futures rose 16 cents, or 0.2%, to $78.75 a barrel as of 0417 GMT, while U.S. West Texas Intermediate crude climbed 20 cents, or 0.3%, to $73.51.
American Petroleum Institute figures showed U.S. crude stocks rose 670,000 barrels in the week to Feb. 2, well below forecasts for a 1.9 million barrel build from analysts polled by Reuters.
U.S. government weekly data on oil inventories will be released later on Wednesday.
For 2024, the U.S. Energy Information Administration (EIA) on Tuesday cut its outlook for domestic oil output growth by 120,000 barrels per day (bpd) to 170,000 bpd, sharply lower than last year’s output increase of 1.02 million bpd.
EIA also forecast U.S. production would not exceed the December 2023 record of more than 13.3 million barrels per day (bpd) until February 2025.
The outlook strengthened the case that the oil market will be balanced in 2024, analysts at Haitong Futures said in a note, adding that they expect oil prices to remain in a $10 range around current levels.
Meanwhile, U.S., Qatari and Egyptian mediators prepared a diplomatic push to bridge differences between Israel and Hamas on a ceasefire plan for Gaza after the Palestinian group responded to a proposal for an extended pause in fighting and hostage releases.
Traders have been closely following the situation in the Middle East, especially attacks on shipping by Iranian-backed Houthi rebels in the crucial Red Sea that has disrupted traffic through the Suez Canal, the fastest sea route between Asia and Europe and one that sees nearly 12% of the global oil trade.
Houthis said on Tuesday they had fired missiles at two vessels in the Red Sea, causing damage to the ships.
“Given the heightened geopolitical risk, the rangebound trading and lack of a risk premium may surprise some,” ING analysts Warren Patterson and Ewa Manthey said in a note.
“It’s important to remember that while we are seeing disruptions to trade flows as a result of Red Sea developments, oil production remains unchanged as a result.”
Bolstering oil supply, a consortium led by Exxon Mobil that controls all oil production in Guyana is pumping about 645,000 bpd in the South American country, up from about 400,000 bpd in late 2023.
(Reporting by Arathy Somasekhar and Muyu Xu; Editing by Jacqueline Wong and Sonali Paul)