Oil builds on Wednesday on the back of sound US demand and declining oil inventories, reports Reuters.

A barrel of European Brent crude futures goes for USD 85.60 on Wednesday morning against USD 84.83. At the same time, US benchmark West Texas Intermediate trades at USD 82.09, up from USD 81.19.

Oil is expected to rise further in the coming months following Saudi Arabia’s announcement of further production cuts of 1 million barrels per day until September, on top of eight Opec+ countries’ already announced production cuts.

However, prices are not expected to exceed USD 90 per barrel, given some recessionary pressure in Europe and elsewhere, and expectations of slowing demand once the summer peak demand period for transportation fuels is over, Leon Li, an analyst at CMC Markets, told Reuters.

Concerns about slowing demand in China as prices rise, as well as weak Chinese PMI data, could also curb price increases this time around.

Figures from the industry organization American Petroleum Institute, API, showed a decline of approximately 15.4 million barrels in week 30 on Tuesday evening, according to Reuters. The market is now waiting for US oil inventory figures on Wednesday afternoon.

(Translated using DeepL with additional editing by Simon Øst Vejbæk)