Oil rose to trade around US$80 a barrel in London as traders weighed signs of tightening in the global crude market against a shaky economic backdrop. 

Brent futures added 0.6 per cent in thin trading volumes on Wednesday. It rose the previous session as data showed that Russia's crude shipments fell to a six-month low in the four weeks to July 16. The curbs suggest that Moscow is fulfilling a pledge with its partners in the OPEC+ coalition to rein in supplies. 

Oil has been buffeted over the past couple of months as investors weigh China's stuttering recovery against supply cuts by OPEC+ heavyweights Saudi Arabia and Russia, and indications that the Federal Reserve may be close to concluding a cycle of interest-rate hikes. Prices have made a decisive break higher since late June on signs that the market may finally be tightening, but are still lower for the year. 

“It looks like the price weakness is behind us, and traders seem to recognize that the market will tighten significantly from this month due to supply cuts and improving demand,” said Carsten Fritsch, commodity analyst at Commerzbank AG in Frankfurt. “But the prospect for recessions in the US and the eurozone combined with slower demand in China will provide headwinds.”

Russia said it aims to reduce its third-quarter crude export plans by 2.1 million tons, in line with its previously stated pledge to cut overseas shipments by 500,000 barrels a day in August.

There are also signs of tightening in the U.S., the world's biggest fuel consumer. 

The American Petroleum Institute said that U.S. oil inventories fell by 797,000 barrels last week, according to a person familiar with the data. The API is funded by the oil industry. 

Stockpiles at the storage hub in Cushing, Oklahoma, dropped by three million barrels last week. That would be the biggest decline since October 2021, if confirmed by the official Energy Information Administration due Wednesday. 

Prices:

• WTI for August delivery added 0.5 per cent to US$76.10 a barrel at 10:30 a.m. in London.
• Brent for September settlement rose 0.6 per cent to US$80.13 a barrel.

Brent's prompt timespread was at 15 cents a barrel in backwardation, near the narrowest this month, in a sign that traders remain cautious.