By Peter Nurse
Investing.com — Oil prices edged lower Thursday, but are still heading for a third consecutive positive week with sentiment buoyed by the surprise decision of OPEC+ to cut its production levels and a hefty drop in U.S. crude stocks.
By 09:20 ET (13:20 GMT), U.S. crude futures traded 0.1% lower at $80.50 a barrel, while the Brent contract fell 0.1% to $84.92 a barrel.
Both benchmarks are on course to register gains of over 7% this week after the Organization of the Petroleum Exporting Countries and allies including Russia, a group known as OPEC+, announced at the start of the week additional output cuts of just over 1 million barrels per day from May.
“Given that most of these members are producing at or near their current quota levels suggests that actual supply reductions will not be too dissimilar to the paper cuts announced,” ING said, in a note.
Official weekly data also showed that U.S. crude stockpiles fell sharply for a second week in a row as domestic refiners prepared for busy summer travels.
U.S. crude inventories fell by 3.74 million barrels last week, according to data from the U.S. Energy Information Administration released Wednesday, adding on to a fall of 7.5 million barrels the week before.
The strong gains, particularly at the start of the week, prompted Saudi Arabia to lift its official selling price for all of its grades of crude oil into Asia for May.
“This is the third consecutive month of increases in the OSP as China sees a recovery in demand following the dropping of its zero-Covid policy,” added ING.
However, gains are being restrained Thursday after the number of new applications for unemployment insurance in the U.S. soared by 228,000 last week, much more than expected, in the latest sign of cooling in the U.S. labor market.
This release adds to a steady stream of economic data releases which have raised concerns over economic growth in the world’s largest economy, and largest consumer of crude.