Oil edged higher after a mixed snapshot of U.S. inventories that included a drop in nationwide crude holdings.

Prices are recovering after a recent bout of weakness. Benchmark Brent futures traded near US$84 a barrel Thursday following a 1.36 million-barrel weekly draw in total crude stockpiles, though inventories at the Cushing storage hub climbed to the highest since last July.

Closely watched timespreads, which have been flashing weakness lately, reversed some of their declines of recent days, signaling a slightly brighter outlook. Meanwhile, a gauge of swings in Brent during the past 100 days fell to its lowest level since 2019 as the market stabilizes.

Oil has been broadly losing steam since early last month as tensions in the Middle East ease. Softer timespreads and narrower refining margins suggest a lackluster market, while OPEC+ supply is once again in focus, with key member Russia pumping above target before the cartel meets next month.

The group is widely expected to extend output curbs when producers convene June 1.

“We expect lower OPEC+ supply for longer,” Goldman Sachs Group Inc. analyst Daan Struyven said in a note. Still, higher production targets remain “plausible” as growing spare capacity could increase pressure to boost output.

Separately, the Biden administration raised the price it’s willing to pay to refill America’s emergency oil reserves. The Energy Department will pay as much as $79.99 a barrel, the first time an explicit ceiling has been set.

“Despite the bearish overhang of weak implied gasoline and diesel demand, U.S. crude inventories are drawing,” said Keshav Lohiya, founder of consultant Oilytics. “The Biden administration focuses on buying back SPR barrels as long as WTI is under $80, which has brought an implied floor at these current prices for now.”

Prices:

• Brent for July settlement gained 0.4 per cent to $83.89 a barrel at 9:06 a.m. in New York
• West Texas Intermediate for June delivery rose 0.5 per cent to $79.37 a barrel