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Oil prices rebounded slightly after reaching multi-month lows, as expectations grew that major producers might delay a planned output increase for the upcoming month, and U.S. oil inventories showed a decline. However, gains were limited due to ongoing concerns about weak demand.

Brent crude futures for November rose by 15 cents, or 0.1%, to $72.85 per barrel as of 0402 GMT, following a 1.4% drop in the previous session, marking the lowest close since June 27, 2023. U.S. West Texas Intermediate (WTI) crude futures for October also gained 15 cents, or 0.22%, to $69.35, recovering from a 1.6% decline on Wednesday, which marked the lowest settlement since December 11.

“Negative sentiment in oil markets eased after strong API data and news that OPEC+ may reconsider its planned output increase, raising hopes,” said Priyanka Sachdeva, senior market analyst at Phillip Nova.

The Organization of the Petroleum Exporting Countries and its allies, known as OPEC+, which is led by Russia, are reportedly discussing delaying their scheduled oil output increase set for October, according to four sources from the group. This reconsideration comes after oil prices dropped significantly.

OPEC+ had initially planned to go ahead with an increase of 180,000 barrels per day (bpd) starting in October, as part of efforts to gradually unwind earlier cuts of 2.2 million bpd. However, factors such as a potential resolution to the disruption of Libyan oil exports and weak demand from China have prompted the group to reevaluate the decision.

Oil prices were also supported by data from the American Petroleum Institute (API), which indicated that U.S. crude oil and fuel inventories declined last week. According to market sources, API reported that crude stocks fell by 7.431 million barrels during the week ending August 30, compared to analysts’ expectations of a 1 million barrel draw in a Reuters poll.

“The API data was positive for the market,” said analysts from ING in a client note. They added that if official government data due later from the Energy Information Administration (EIA) confirms a similar decline, it could be the largest weekly drop since June. The EIA data is expected to be released at 1430 GMT on Thursday.

Nevertheless, concerns over weak demand, particularly from China, continued to cap price gains. Recent data from the Chinese government revealed that the country’s manufacturing activity fell to a six-month low in August, with factory prices dropping and companies struggling to secure orders.

“Economically, the slowdown in the Chinese economy and weaker-than-expected oil demand have undermined market confidence,” said analysts from Citi in a note.

They also warned of a softer market outlook, citing upcoming refinery maintenance, the end of increased oil demand from the Middle East’s summer energy needs, and weak refining margins, which could lead to reduced refinery operations and lower oil demand.

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