Increase recoups some of the previous session's losses. PHOTO: REUTERS
LONDON: Oil prices rose on Thursday, recouping some of the previous session's losses after OPEC forecast a supply deficit next year and the US Federal Reserve said the economic outlook was favourable.
Prices had fallen on Wednesday after a report showed an unexpected increase in US crude inventories. The market picked up on Thursday, although the International Energy Agency (IEA) and the Organisation of the Petroleum Exporting Countries (OPEC) offered different prospects for the oil market in 2020.
Brent crude rose $0.41, or 0.6%, to $64.13 a barrel by 1005 GMT. West Texas Intermediate crude was up $0.22, or 0.4%, at $58.98 a barrel.
IEA said on Thursday that global oil inventories could rise sharply despite an agreement by OPEC and its allies to deepen output cuts and expectations for lower production by the United States and other non-OPEC countries.
The market, however, focused more on OPEC, which said it now expected a small deficit in the oil market next year, suggesting the market is tighter than previously thought.
OPEC and other producers including Russia agreed last week to rein in output by an extra 500,000 bpd in the first quarter of 2020.
Oil prices were also supported by the US Federal Reserve keeping interest rates unchanged at a meeting on Wednesday.
"Our economic outlook remains a favourable one, despite global developments and ongoing risks," Fed Chair Jerome Powell told a news conference.
"While oil prices are trending higher benefiting from a dovish Fed, a weaker dollar, the IEA reiterates that despite the deeper oil production cuts, the oil market is likely to be oversupplied in 1H20," said UBS oil analyst Giovanni Staunovo.
Referring to OPEC members Iraq and Nigeria and their weak compliance with the pact in the past, Staunovo said, "We remain sceptical that they (Iraq and Nigeria) will achieve their 100% pledge in the first quarter of 2020... (This) could see oil prices coming under pressure again in the future."
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