Oil is heading to its highest level in more than 3 months with focus on tight supply

Oil prices rose 1 percent on Thursday, to compensate for the losses of the previous session, after overshadowing concerns about the economic slowdown, and expectations of an increase in Chinese demand.

And by 0522 GMT, Brent crude futures rose 72 cents, or 0.9 percent, to $ 83.64 a barrel. US West Texas Intermediate crude also rose 78 cents, or 1 percent, to $79.56 a barrel, heading towards its highest level since April 19.

Oil prices fell on Wednesday after data showed US crude inventories fell less than expected and the Federal Reserve raised interest rates by a quarter of a percentage point, leaving the door open for another hike.

Although the Federal Reserve’s move was expected, the market’s focus is shifting to the Organization of the Petroleum Exporting Countries and its allies (OPEC +) as the alliance’s Joint Ministerial Monitoring Committee holds its monthly meeting next week.

The committee’s demand forecast will be key to whether Saudi Arabia decides to extend its voluntary production cut of 1 million barrels per day until September.

Saudi Arabia cut its production to 9 million bpd in July from about 10 million bpd, the biggest cut in years. It said earlier this month it would extend the cut until August.

Meanwhile, market sentiment remains supported by China’s pledge earlier this week to take more steps to boost growth.

“Chinese authorities have signaled that they will ramp up support measures to revive the ailing Chinese economy, which in turn spurred hopes of an increase in oil demand from the world’s largest importer of crude oil,” analyst Priyanka Sachdeva of Phillip Nova said in a note.