Oil rises on indications of lower US output and increased demand from China and Europe

Wednesday saw an increase in oil prices due to evidence of declining U.S. output and increased demand in China and Europe as buyers stepped in after prices dropped to all-time lows earlier in the week.

By 1215 GMT, U.S. West Texas Intermediate crude was up 44 cents, or 0.74%, to $59.53 a barrel, while Brent crude futures had increased 37 cents, or 0.6%, to $62.52 a barrel.

Following OPEC+’s decision to accelerate output increases, which fueled concerns about oversupply at a time when U.S. tariffs have sparked worries about demand, both benchmarks had fallen to a four-year low.

But in recent weeks, lower oil prices have led some U.S. energy companies, such as Diamondback Energy (FANG.O) and Coterra Energy (CTRA.N), to declare that they would be cutting certain rigs. According to experts, this will eventually raise prices by lowering output.

Daniel Hynes, senior commodity analyst at ANZ bank, stated that the most recent statements indicated that output would decline in the upcoming months. “We warned last month that falling prices and declining drilling activity was raising the risk of U.S. oil output falling.”

According to market sources, who cited data from the American Petroleum Institute on Tuesday, crude stocks dropped 4.5 million barrels in the week ending May 2.

The deadline for U.S. government stockpile reporting is 10:30 a.m. ET (1430 GMT). According to a Reuters poll of analysts, U.S. crude oil stocks fell by an average of 800,000 barrels last week.

Indications of increased demand also helped prices. As market participants returned from the five-day break and during the May Day celebration, Chinese consumers upped their spending.

Companies in Europe are anticipated to post first-quarter earnings growth of 0.4%, which is an improvement over the 1.7% decline that analysts had predicted a week prior.

With tariffs threatening the economy, it is generally anticipated that the Fed would keep interest rates unchanged on Wednesday.