Oil prices rebounded from 12-month lows on Thursday over supply concerns due to OPEC’s decision to adhere to its existing supply cut plan and an unexpected build in US gasoline stockpiles.
International benchmark crude Brent traded at $85.92 per barrel at 11.29 a.m. local time (0829 GMT), a 0.13% gain from the closing price of $85.81 a barrel in the previous trading session on Wednesday.
The American benchmark West Texas Intermediate (WTI) traded at the same time at $84.92 per barrel, up 0.83% from Wednesday’s close of $84.22 per barrel.
Oil prices dipped to the lowest level since September last year on Wednesday, dropping more than 5% after data showed weakening fuel demand during the end of the travel season in the northern hemisphere.
According to data released by the US Energy Information Administration’s (EIA) on Wednesday, US gasoline stocks rose by 6.5 million barrels to 227 million barrels.
However, early Asian trading saw prices rally due to profit-taking by investors looking to take advantage of low pricing.
OPEC’s decision to cut oil supplies by a total of 1.3 million barrels by the end of the year also bolstered prices.
Following the Joint Ministerial Monitoring Committee (JMMC) meeting on Wednesday, OPEC declared it would sustain output cuts, fueling fears that supply would continue to decline despite a predicted increase in demand in the fourth quarter.
Just hours before the OPEC meeting, Russia and Saudi Arabia said they would continue their existing supply cuts until the end of the year. They also confirmed their decision would be reevaluated in November with the possibility of deepening output curbs or increasing production.
Russian Deputy Prime Minister Aleksander Novak said that a market analysis would be conducted next month to determine whether oil production would be reduced or increased.
Meanwhile, Saudi Arabia announced that it would extend its voluntary cut of 1 million barrels per day (bpd) in place since July until the end of December this year.
The supply cuts are in addition to the group’s production curb in place since October last year of 2 million bpd and up to 1.6 million bpd since May.
