After posting an approximate 2% increase on Wednesday with signs of rising demand in the US, crude prices lost gains in early trade on Thursday following the decision late Wednesday of the Organization of Petroleum Exporting Countries (OPEC) to raise oil production next month.
International benchmark Brent crude was trading at $43.48 per barrel at 0646 GMT on Thursday for a 0.7% loss after closing Wednesday at $43.79 a barrel with a 2.1% daily increase.
American benchmark West Texas Intermediate (WTI) was at $40.78 a barrel at the same time for a 1% decline after ending the previous day at $41.20 per barrel with a 2.2% daily increase.
Oil prices soared more than 2% on Wednesday as data from the Energy Information Administration (EIA) signaled a recovery in US oil demand.
US crude oil inventories declined by 7.5 million barrels, much higher then the market expectation of a 2.1 million barrel decrease, the EIA data showed on Wednesday, implying that crude stocks are being sold with rising oil consumption.
However, oil prices came under pressure after OPEC and its allies agreed later Wednesday to ease their crude production cut to 7.7 million barrels per day (bpd) starting from August, from the existing level of 9.7 million bpd.
Although Saudi Arabian and Russian energy ministers said Wednesday the excess supply of OPEC+ would be consumed by rising domestic demand in producing countries, investors are cautious that a second wave of the novel coronavirus (COVID-19) could easily knock down global oil demand.
Saudi Prince Abdulaziz bin Salman was optimistic in noting the OPEC+ group expects growth in jet fuel, gasoline, and diesel consumption in the coming months due to the change in transportation patterns around the world.
Russian Energy Minister Alexander Novak said the group’s rising crude output from August onwards “should not affect the market due to rising demand in domestic markets.”