U.S. West Texas Intermediate and international-benchmark Brent crude oil futures are trading higher on Wednesday shortly after the cash market opening and the release of today’s government inventories report.

The markets are reversing earlier weakness that was fueled by follow-through selling related to yesterday’s steep break. That move was fed by concerns over weaker global demand, which offset potentially bullish news about future supply cuts and a private report showing a bigger drop than expected in U.S. crude oil stockpiles.

At 12:36 GMT, August WTI crude oil is at $56.73, up $0.48 or +0.85% and September Brent crude oil is at $63.14, up $0.74 or +1.19%.

Demand Concerns Driving Price Action

Signs of a global economic slowdown led to a steep drop on Tuesday and limited pressure earlier today after global manufacturing data came in weaker than expected. Additionally, the United States government threatened to impose additional tariffs on the European Union.

In other demand news, Barclays said it expected demand to grow at its slowest pace since 2011, gaining less than 1 million barrels per day year-on-year this year.

Supply News Supportive

News on the supply front was supportive, but not strong enough to offset the new worries about demand.

As expected, OPEC and its allies decided to extend their program to limit production, trim the global supply and stabilize prices until March 2020. The new program extends the output cuts to nine months, up from six. However, traders may have been disappointed that the group didn’t agree to deeper cuts.

Additionally, late Tuesday, the American Petroleum Institute announced that U.S. crude inventories fell by 5 million barrels last week. This was more than the expected decrease of 3 million barrels.

Daily Forecast

Today’s key data is the U.S. Energy Information Administration weekly inventories report, due to be released at 14:30 GMT. It is expected to show a 2.8 million barrel draw down. A bigger than expected decline will be supportive on paper, but ultimately the direction of the market will be determined by trader concerns over demand.

Earlier today, a jobs report showed the private sector hired fewer workers than expected. Additionally, the U.S. trade balance widened and weekly unemployment claims rose slightly more than expected.

The markets could also get a jolt from the release of the ISM Non-Manufacturing PMI report at 14:00 GMT.