Oil rose, reversing earlier losses, as an expected increase in U.S. crude inventories was overshadowed by expectations that OPEC+ will extend supply cuts.

West Texas Intermediate climbed almost 1 per cent to trade above US$79 a barrel, building on earlier advances this week that were driven by signs of strength in physical markets. The industry-funded American Petroleum Institute reported that nationwide crude holdings rose 8.4 million barrels last week, including a 1.8 million barrel buildup at the storage hub in Cushing, Oklahoma. Official government figures on US inventories are due later Wednesday.

Widely tracked gauges of the physical market are pointing to tighter conditions. Near-term timespreads have been widening in a bullish, backwardated pattern — with near-term barrels priced above longer-dated ones. So-called physical market swaps and the WTI cash roll have also strengthened. The roll, which reflects supply-and-demand balances at Cushing, Oklahoma, the delivery point for U.S. futures, has climbed to the highest level in more than a year.

Oil is pushing toward a modest monthly gain, though prices remain within a relatively tight band. The advance has been supported by supply cuts from OPEC and its allies, with the group widely expected to agree to prolonging reductions into the second quarter. Prices have also been aided by tensions in the Middle East.

Still, concerns about the demand outlook remain. China’s crude consumption growth is expected to expand by just 1 per cent this year as a post-pandemic recovery fades and adoption of new energy vehicles saps demand, China National Petroleum Corp. forecast in a report released Wednesday.

Prices:

• WTI for April delivery rose 0.6 per cent to $79.38 a barrel at 10:05 a.m. in New York.
• Brent for April settlement slipped climbed 0.5 per cent to $84.09 a barrel.