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OPEC+ Cuts And Inventory Declines Counter Growing Demand Concerns

June WTI crude oil prices remained relatively stable on Thursday and into Friday morning but marked a third consecutive weekly increase as investors evaluated the impact of OPEC+ production cuts and falling U.S. oil inventories against concerns regarding the global economic outlook.

This week, the U.S. benchmark rose by over 6% after OPEC+ announced a commitment to reducing production. Hedge funds have been buying crude oil throughout the week, indicating a return to a "risk on" market.

US Crude Inventories Decline for Second Straight Week, Signaling Uptick in Demand

Oil prices were supported by a greater-than-anticipated decline in U.S. crude inventories for a second straight week, along with reduced gasoline and distillate inventories suggesting an uptick in demand.

Additionally, U.S. energy firms reduced the number of oil rigs for the second consecutive week, signaling a potential reduction in future output.

Concerns Over Economic Slowdown May Impact Oil Demand Despite Supply Cuts

However, U.S. labor market data pointed towards a slowdown in economic growth, and the U.S. services sector experienced slower-than-expected expansion.

There is a concern that demand destruction due to the possibility of a recession may outweigh the impact of OPEC+ cuts.

Buyers of put options were more active than buyers of call options, suggesting that traders were concerned about the possibility of falling prices. Despite the temporary pause in…

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