In Asian trade on Wednesday, oil prices rose as traders balanced poor demand signs from major importer China and the threat of future US rate rises against anticipated supply constraints.
Brent crude was up 15 cents, or 0.2%, to $84.18 a barrel at 0600 GMT, while West Texas Intermediate crude was up 17 cents, or 0.2%, to $79.81 a barrel.
On Tuesday, both benchmarks fell by around 0.5%.
Markets are looking for clues about the outlook for interest rates when Federal Reserve officials and policymakers from the European Central Bank, the Bank of England, and the Bank of Japan convene in Jackson Hole, Wyoming, later this week for their annual conference.
“Investors are reluctant to take big positions ahead of the Jackson Hole symposium as they want to find clues for the next step by the U.S. Federal Reserve,” said Hiroyuki Kikukawa, president of NS Trading, a unit of Nissan Securities.
“Concerns over higher interest rates and sluggish demand in China are expected to outweigh tightening supply from OPEC+ in the short term.”
China, the world’s second-largest economy, is considered crucial to shoring up oil demand over the rest of the year. Its weak growth has frustrated markets as pledged stimulus has fallen short of expectations, including a smaller-than-expected cut in a key lending benchmark on Monday.
On the supply side, Saudi Arabia has volunteered to cut output by another 1 million barrels per day (bpd) from July through September, and Russia plans to reduce exports in August by 500,000 bpd.
These moves are part of a deal among members of the Organization of the Petroleum Exporting Countries and its allies, a grouping known as OPEC+, to curb supplies and support prices.
Crude stocks in the United States continued to fall, dropping by about 2.4 million barrels in the week ended Aug. 18, according to market sources citing American Petroleum Institute figures on Tuesday. That was a slightly smaller draw than a drop of 2.9 million barrels analysts expected in a Reuters poll.
“Following the massive draw of 6.2 million barrels a week earlier, overall supplies conditions still lean on the tighter end,” said Jun Rong Yeap, a market strategist at IG in Singapore.
The weekly report from the Energy Information Administration, the statistical arm of the U.S. energy department, is due at 1430 GMT on Wednesday.