Oil edges up on smaller US output growth estimates

The sun sets behind the chimneys of the Total Grandpuits oil refinery, southeast of Paris, France, March 1, 2021. REUTERS/Christian Hartmann

Oil prices ticked higher on Wednesday, as growth in U.S. oil production is expected to remain largely steady through 2025, easing worries of excess supply.

Brent crude futures rose 38 cents, or 0.5 percent, to $78.97 a barrel as of 0013 GMT, while U.S. West Texas Intermediate crude climbed 41 cents, or 0.6 percent, to $73.72. Both contracts had gained slightly on Monday.

U.S. domestic production will not exceed the December 2023 record of more than 13.3 million barrels per day until February 2025, the U.S. Energy Information Administration (EIA) said on Tuesday in its short term energy outlook.

READ: IEA sees surplus oil supply in 2024 even if OPEC+ extends current cuts

The EIA also cut its forecast for domestic oil output growth in 2024 by 120,000 barrels per day (bpd) to 170,000 bpd, sharply lower than last year’s output increase of 1.02 million bpd.

U.S. government data on oil inventory will be released later on Wednesday. U.S. crude stocks are expected to have risen 1.9 million barrels in the last week as production recovered from a cold freeze and refiners started maintenance.

Meanwhile, U.S., Qatari and Egyptian mediators prepared a diplomatic push to bridge differences between Israel and Hamas on a ceasefire plan for Gaza after the Palestinian group responded to a proposal for an extended pause in fighting and hostage releases.

Traders have been closely following the situation in the Middle East, especially attacks on shipping by Iranian-backed Houthi rebels in the crucial Red Sea that has disrupted traffic through the Suez Canal, the fastest sea route between Asia and Europe and one that sees nearly 12% of the global oil trade.