Oil prices recovered from their recent losses following the release of a report by the American Petroleum Institute indicating the U.S. stockpiles declined by 5.2 million barrels over the past week. Should official figures reflect this change when released on Wednesday, this would be the seventh weekly decline, keeping current levels under season averages.
Brent crude prices rose to around $81 per barrel while US benchmark West Texas Intermediate headed to $79 per barrel. This comes after both prices declined by around 2% during the previous session. Citigroup Inc. and Goldman Sachs Group Inc. analysts believe that Brent futures may continue to rise due to weather risks and geopolitical instability, with both banks expecting Brent to rise to the mid $80s level per barrel.
“The escalation of the conflict in the Middle East is a clear upside risk to oil prices over the next six months and potentially even longer,” Vivek Dhar of the Commonwealth Bank of Australia observed.
Prices may still shift lower at certain stages amid the possibility of a global surplus as the Organization of the Petroleum Exporting Countries considers restoring production in October. OPEC+’s decision to resume output could largely depend on its demand forecasts, with the cartel expecting a decline in global demand as Chinese demand drops as well.