© Reuters. Oil, miniatures of oil barrels, oil pump jack and U.S. dollar banknote are seen in this illustration taken, June 6, 2023. REUTERS/Dado Ruvic/Illustration

By Natalie Grover

LONDON (Reuters) – Oil prices were little changed on Thursday as the market digested tighter crude supply alongside fears of global economic slowdown.

futures edged 4 cents lower to $76.62 a barrel by 1215 GMT after a 0.5% gain the previous day.

U.S. West Texas Intermediate crude firmed by 4 cents to $71.83 after rising by 2.9% in post-holiday trade on Wednesday to catch up with Brent’s gains earlier in the week.

On the supply side, top oil exporters Saudi Arabia and Russia announced a fresh round of output cuts for August. The total cuts now stand at more than 5 million barrels per day (bpd), equating to 5% of global oil output.

The cuts, along with a bigger than expected drop in stocks, provided some support for prices.

OPEC is likely to maintain an upbeat view on oil demand growth for next year when it publishes its first outlook for 2024 this month, predicting a slowdown from this year but still an above-average increase, sources close to OPEC told Reuters.

OPEC ministers and executives from oil companies told a two-day conference in Vienna that governments needed to turn their attention from supply to demand.

Rather than pressuring oil producers to curb supply, which heads of global energy companies say serves only to increase prices, governments should shift the focus to limiting oil demand to reduce emissions, they said.

In the shorter term, PVM analyst Tamas Varga expects prices to strengthen.

“The oil balance will likely tighten and so will financial conditions, judging by the Fed minutes released last night,” he said. “Persistent recession worries will probably encumber, but not prevent, oil from marching higher.”

The market has been expecting interest rates in the U.S. and Europe to rise further to tame stubbornly high inflation while fears of a global recession have been heightened by recent surveys showing that factory and services activity in China and Europe has slowed.

Minutes released on Wednesday showed that a united U.S. central bank agreed to hold rates steady at its June meeting to buy time and assess the need for further hikes, even though most attendees expected they would eventually need to tighten policy further.