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on thursday, reuters quoted a representative as saying that opec+ has reached a consensus to postpone the implementation of the plan to increase oil supply by two months.

after the news that opec+ agreed to postpone the october production increase for two months came out, wti crude oil futures rose by about $1 to above $70.40 a barrel, with an overall increase of more than 1.3% during the day.

this is similar to the report on wednesday, but it goes a step further. yesterday, more than one media outlet reported that opec+ was considering postponing production increases. international crude oil futures rose in the short term on wednesday, once rising by more than 1%, but the boost from the news was limited. since then, oil prices have fallen back, with us oil falling by more than 2% at one point.

the opec+ position reported this week is a huge reversal from last friday. last friday, reuters also reported that opec+ plans to push forward the previously proposed production increase plan in the fourth quarter of this year. according to the original plan finalized by opec+ in june this year, starting from october, the opec+ countries led by saudi arabia and russia will gradually resume oil production and gradually withdraw the voluntary production cuts of 2.2 million barrels per day by the eight countries in the agreement. in october, opec+ will increase production by 180,000 barrels per day.

the news that opec+ may continue to increase production last friday caused oil prices to plummet that day. on tuesday, hopes for libya to resume normal oil production and exports increased significantly, making oil prices even worse. this week, u.s. oil closed below the $70 mark for the first time since december last year, and brent crude hit a new closing low since june last year.

opec+'s drastic change in position in a short period of time comes at a time when poor global economic data has caused concerns about demand and oil prices are in an extremely depressed situation. the organization has repeatedly emphasized that it can suspend its production increase plan if necessary, or reverse its actions and continue to cut production.

some market observers are concerned that global crude oil inventories will increase in the first half of 2025. however, according to inventory data this week,u.s. crude oil inventories continued their previous generally downward trend and have fallen to the lowest level since january this year.

data from the u.s. energy information administration (eia) on thursday showed that u.s. crude oil inventories fell by 6.873 million barrels last week, while bloomberg users expected a decrease of 3.97 million barrels and analysts expected a decrease of 378,710 barrels. the previous week's decrease was 846,000 barrels. u.s. crude oil inventories have fallen in nine of the past 10 weeks.

data from the american petroleum institute (api) after the u.s. stock market closed on wednesday showed that u.s. api crude oil inventories fell sharply by 7.4 million barrels last week.

other important parts of the u.s. eia data for the week of august 30 are as follows:

• crude oil inventories in cushing, the delivery point for wti crude oil, fell by 1.142 million barrels, compared with a decrease of 668,000 barrels in the previous period.

• the biden administration added 1.8 million barrels of crude oil to the strategic petroleum reserve (spr), the largest increase since june 2020.

• gasoline inventories increased by 848,000 barrels, compared with expectations for a decrease of 1.11 million barrels and a previous decrease of 2.203 million barrels. gasoline inventories reversed the previous three-week decline.

• refined oil inventories decreased by 371,000 barrels, compared with expectations for an increase of 410,000 barrels and the previous value of an increase of 275,000 barrels.

• refinery utilization changed by 0%, expected to be -0.8%, and the previous value was 1%.

• u.s. crude oil production remains at an all-time high, even as the number of oil rigs continues to decline.

although the above inventory data showed an unexpected increase in gasoline inventories, while the rest continued to decrease, after the data came out, oil prices failed to maintain the gains after opec+ agreed to suspend supply increases, and the gains were given up.

on thursday, wti october crude oil futures closed down $0.05, or 0.07%, at $69.15 per barrel, hitting a new closing low since june 2023. brent november crude oil futures closed down $0.01, or 0.01%, at $72.69 per barrel.

financial blog zerohedge commented:

the continued drain on cushing inventories, which are rapidly approaching the 20 million barrel level many consider to be the bottom of the tank, means a few more weeks of this downward trend will have everyone talking about the bottom of the tank.

despite the plunge in u.s. inventories, despite the risk of tank bottoming out at cushing and despite opec+’s decision not to increase production, oil prices continued their earlier decline as bears now dominate.

however, with demand flat or possibly rising, there is limited room for further inventory reductions, which will ultimately lead to an unprecedented showdown between paper and physical prices and a full-blown physical oil crisis, which will put short cta trades in a difficult position.