Oil Prices Rebound as U.S. Output Slows and Global Demand Picks Up

Oil prices rose on Wednesday, supported by signs of slowing U.S. production and stronger demand in Europe and China. Brent crude gained 0.6% to $62.52 per barrel, while U.S. West Texas Intermediate (WTI) climbed 0.74% to $59.53.

The rebound follows a steep drop earlier in the week, when both benchmarks hit four-year lows after OPEC+ announced plans to accelerate output increases. This move had initially sparked fears of a global oil surplus amid ongoing demand uncertainty fueled by U.S. tariffs.

However, recent declines in oil prices have prompted several U.S. energy companies, including Diamondback Energy (NASDAQ:FANG) and Coterra Energy (NYSE:CTRA), to scale back drilling operations. Analysts suggest these cutbacks could ease oversupply concerns over time.

Daniel Hynes, senior commodity strategist at ANZ Bank, noted that a continued slowdown in drilling activity increases the risk of lower U.S. production in the coming months. Supporting this view, the American Petroleum Institute reported a 4.5 million barrel drop in U.S. crude inventories last week. Official government data is expected to show an 800,000-barrel decline.

Meanwhile, improving global demand is also helping buoy oil markets. In China, consumer spending surged during the May Day holiday as the country emerged from a five-day break. In Europe, corporate earnings forecasts have improved, with first-quarter growth now expected at 0.4%, up from a previously forecast decline of 1.7%.

Market attention is also on the U.S. Federal Reserve, which is expected to keep interest rates steady as trade tensions continue to cloud the economic outlook.

These combined signals of tightening supply and growing demand are offering renewed support to oil prices.