Oil prices gained ground Thursday, driven by an unexpected dip in U.S. fuel inventories and growing speculation that OPEC+ may hold back on a planned production increase, potentially extending it into early next year. Both Brent crude and West Texas Intermediate (WTI) crude saw increases, with Brent settling at $72.99 a barrel, up 0.61%, while WTI rose to $69.07, a 0.67% gain.

These increases mark a rebound from early-week declines when oil dropped over 6% due to reduced risks of escalation in the Middle East. The Energy Information Administration's (EIA) latest report revealed a surprising decrease in gasoline and crude stockpiles, indicating stronger-than-expected U.S. fuel demand. Analysts had anticipated an uptick in both categories, making the unexpected drawdown a signal of heightened domestic consumption. "The surprise decline in U.S. gasoline stockpiles provided a buying opportunity as demand appeared stronger than anticipated," said Toshitaka Tazawa, an analyst at Fujitomi Securities.

The report showed that U.S. gasoline reserves fell to their lowest point in two years for the week ending October 25, while crude inventories also declined as imports tapered off. These shifts in stockpiles have added a bullish tone to the market amid broader concerns over oil supply and demand dynamics.

Adding to the momentum, OPEC+ may decide next week to delay its December production increase of 180,000 barrels per day (bpd), a move initially postponed from October due to concerns over weakening global demand. The possibility of a delayed production boost is aimed at stabilizing prices amid rising global supply concerns, according to sources familiar with the matter. A final decision on this is expected at OPEC+'s December 1 meeting.

"The potential delay in OPEC+ production increases has offered support, as the group appears cautious about pushing more oil into a market that is already balancing on tight demand," noted Tazawa. Analysts expect that if OPEC+ confirms the delay, WTI crude could stabilize around the $70 mark.

Meanwhile, geopolitical factors continue to exert a substantial influence on the oil market. Easing tensions in the Middle East - including Israel's recent limited retaliatory action against Iran and diplomatic efforts toward ceasefires involving Lebanon and Gaza - have helped allay fears of a broader regional conflict that could disrupt oil supplies. However, analysts warn that the current calm may not last. Ole Hvalbye, an analyst at SEB AB, cautioned, "The market's recent geopolitical relief seems premature," adding that while U.S. inventory data provide some positive signs, the looming decisions from OPEC+ and potential instability in the Middle East remain key price drivers.

Beyond OPEC+ decisions and Middle East developments, broader economic indicators are also shaping market expectations. In China, the world's top oil importer, manufacturing activity expanded in October for the first time in six months, a signal that the country's stimulus measures may be taking hold. This uptick in industrial output from China adds an additional layer of support for oil demand projections.

Market participants are also closely watching the U.S. presidential election on November 5, which could influence both economic and foreign policy. Any shifts in U.S. energy policy or relations with key oil-producing nations could further impact global oil prices. "The stakes for the market are high as the election outcome could set the tone for U.S. oil demand and energy strategy," said Ole Hansen, head of commodity strategy at Saxo Bank.

While a softening global demand outlook has tempered some optimism in oil markets, concerns over a potential supply glut in 2025 have refocused attention on longer-term market balance. Analysts warn that with supply expected to surpass demand in the coming years, OPEC+ and other oil producers will likely need to exercise caution with any production adjustments.

Both Brent and WTI futures remain responsive to the shifting landscape, with recent price recovery highlighting oil's sensitivity to supply and demand fundamentals, geopolitical influences, and macroeconomic signals. As traders await further developments from OPEC+ and updates on Middle Eastern ceasefire negotiations, the oil market's trajectory remains volatile but cautiously optimistic.