Oil rose 44% this year, fuelled by demand recovery and supply curbs by the Organization of the Petroleum Exporting Countries and allies, known as OPEC+. The group agreed to increase supply by 400,000 barrels per day from August.
The move unwinds more of 2020’s record supply cut, but this is seen as too low by some analysts.
Naeem Aslam of online broker Avatrade said that oil supply is likely to remain tight even with the production hikes set by OPEC+.
On Wednesday, the oil rose towards $75 a barrel ahead of an industry report. The report will show U.S. crude inventories dropped more than expected.
Reports said that U.S. crude stocks fell 4.7 million barrels more than analysts forecast. Brent crude added 34 cents, or 0.5%, to $74.82 a barrel at 0820 GMT. This came after Tuesday when it posted its first decline in six days. Moreover, U.S. West Texas Intermediate (WTI) crude rose 40 cents, or 0.6%, to $72.05.
The Energy Information Administration Report
Markets await the official U.S. Energy Information Administration (EIA) inventory figures, which will be out at 1430 GMT.
Referring to the EIA report, Stephen Brennock of broker PVM, said that this price catalyst may inject some much-needed momentum into proceedings, especially after the API set a bullish tone.
Vaccination programmes have been put in place however, still, coronavirus cases continue to rise, limiting growth for the energy commodity.
Markets are also watching out for a statement from the Fed’s policy meeting due at 1800 GMT. The firming dollar ahead of the meeting tends to put pressure on the oil commodity. The dollar can make crude more pricey for other currency holders.
Meanwhile, in precious metals, gold barely changed at USD 1799.00 an ounce. Gold rose ahead
of the Federal Open Market Committee, up by 0.40% to USD 1806.40 an ounce.
In the international market, the yellow metal was trading with marginal gains at $ 1,800 per ounce. Another precious metal, the silver, was unchanged at $ 24.76 per ounce.
HDFC Securities, Senior Analyst (Commodities), Tapan Patel. said gold prices fluctuated ahead of the outcome from the U.S. FOMC meeting.
Navneet Damani, VP – Commodities Research, Motilal Oswal Financial Services said that gold continues to trade steady. It was hovering near the $ 1,800 level amidst volatility in U.S. dollar and Yields. This was though gains were limited, as a cautious approach is followed by the investors ahead of a Federal Reserve meeting.