Oil barrels are pictured at the site of Canadian group Vermilion Energy in Parentis-en-Born, France, October 13, 2017.
Oil barrels are pictured at the site of Canadian group Vermilion Energy in Parentis-en-Born, France, October 13, 2017. Reuters / REGIS DUVIGNAU

Oil prices were little changed after erasing early losses on Thursday after OPEC+ agreed to boost crude output to compensate for a drop in Russian production.

The Organization of the Petroleum Exporting Countries (OPEC) and allies including Russia, known as OPEC+, agreed to raise output by 648,000 barrels per day (bpd) in July and 648,000 bpd in August, a source told Reuters.

Oil prices could get more support later on Thursday if analysts' forecasts are correct that U.S. crude inventories declined by around 1.4 million barrels last week. [ENERGYUSA] [ENERGYAPI]

The American Petroleum Institute (API), an industry group, said on Wednesday that U.S. crude stocks fell by 1.2 million barrels in the week ended May 27.

The U.S. Energy Information Administration (EIA) will issue the official report at 11:00 a.m. EDT (1500 GMT) on Thursday, a day later than usual following Monday's U.S. Memorial Day holiday.

Brent futures rose 40 cents, or 0.3%, to $116.69 a barrel by 9:36 a.m. EDT (1336 GMT), while U.S. West Texas Intermediate (WTI) crude rose 49 cents, or 0.4%, to $115.75.

The benchmarks have mostly marched higher for several weeks as Russian exports have been squeezed by U.S. and EU sanctions against Moscow over its Feb. 24 invasion of Ukraine, an action Moscow calls a "special military operation".

The market has also seen support from China's gradual emergence from strict COVID-19 lockdowns.

Oil prices fell earlier on Thursday ahead of the OPEC+ meeting on expectations Saudi Arabia and other OPEC members could boost oil output to offset a drop in Russian production.

Russian production has fallen by around 1 million bpd following sanctions.

One OPEC+ source familiar with the Russian position said Moscow could agree to other producers raising production to compensate for its lower output but not necessarily making up all the shortfall.

The Kremlin says it can re-route oil exports to minimize losses from EU sanctions, but analysts remain skeptical.

"The extent to which this will prove achievable is questionable, however. Russian oil production is therefore likely to fall again in the coming months," said Commerzbank analyst Carsten Fritsch, who also questioned OPEC+'s ability to add considerably more oil to the market.

As recently as Wednesday, sources expected OPEC+ to stick to its modest monthly increases in oil output, despite seeing tighter global markets.