Oil rose to $75 a barrel on Wednesday with support coming from a tight market, after a steep drop from multi-year highs in the previous session amid uncertainty about OPEC+ supply policy.
Underlining current tightening conditions, U.S. crude inventories are expected to fall for a seventh straight week. A failure of OPEC+ talks on Monday also means a planned output rise for August has yet to be agreed.
“With no agreement, the production and export levels apparently remain unchanged according to the overall framework, which creates the impression that the group does not shy away from overtightening the market,” said Norbert Ruecker of Swiss bank Julius Baer.
“There is indeed some uncertainty with regard to the consequences of the latest meeting’s surprising outcome,” he said.
Brent crude was up $1.20, or 1.6%, at $75.73 per barrel, after slumping more than 3% on Tuesday. U.S. West Texas Intermediate gained $1.23, or 1.7%, to trade at $74.60 per barrel, having declined by more than 2% in the previous session.
OPEC+, which includes the Organization of the Petroleum Exporting Countries, Russia and other producers, abandoned talks on Monday after three days of negotiations failed to close divisions between Saudi Arabia and the United Arab Emirates.
Disagreement among the producers could still prompt them to open the taps. Concerns about that prospect led to Brent to fall on Tuesday from a high of $77.84, the highest since 2018, and U.S. crude sliding from $76.98, the highest since 2014.
“For all the talk of tightening oil fundamentals, the supply outlook is clouded by uncertainty and such conditions are rarely conducive to a sustained increase in prices,” said Stephen Brennock of oil broker PVM.
Away from OPEC+, the first of this week’s two reports on U.S. inventories, from the American Petroleum Institute, is out at 2030 GMT. Analysts expect stocks to fall by 3.9 million barrels.