Oil prices fell for the fifth straight session on Thursday, driven by growing worries about global demand, despite a recent drop in U.S. fuel inventories.
Brent crude futures decreased by 10 cents to $75.95 per barrel, while U.S. West Texas Intermediate (WTI) crude futures fell by 23 cents to $71.70 at 0639 GMT.
Since August 15, the front-month WTI contract for October has dropped 6.9%, and Brent futures have declined by 6.4%. The price decline follows a report on Wednesday revealing revised U.S. employment statistics, which indicated fewer jobs were added in 2024 than previously reported. This, combined with weak economic data from China, has weighed heavily on prices. China, as the world’s largest oil importer, plays a critical role in global demand.
Additionally, investors are anticipating that the Organization of the Petroleum Exporting Countries (OPEC) and its allies, known as OPEC+, may adjust their voluntary output cuts in October, potentially increasing supply.
“Weak global demand and the potential rollback of OPEC+ production cuts are contributing to the downward pressure on oil prices,” noted Priyanka Sachdeva, a senior market analyst at Phillip Nova. She also pointed out that geopolitical tensions, including conflicts in the Middle East, are adding to market uncertainties.
The potential for increased OPEC+ production in the fourth quarter, if cuts are lifted, has exacerbated the price decline. ING analysts suggested that the current downward trend might compel OPEC+ to reconsider their plans to gradually increase supply starting in October. They warned that failing to adjust their strategy could lead to further price pressures.
Crude prices have been under pressure despite a U.S. government report showing declines in U.S. crude, gasoline, and distillate inventories for the week ending August 16, alongside increased refinery activity.
Citi analysts noted that while inventory draws are positive, weak Chinese oil import data and subdued demand for middle distillates in the U.S. have diminished the geopolitical risk premium for the oil market.
The recent easing of concerns regarding the Israel-Gaza conflict, with ongoing attempts by the U.S., Israel, and Hamas to negotiate a ceasefire, has also impacted oil prices. Although U.S. diplomatic efforts earlier this week did not result in a truce, market participants have reduced some of the geopolitical risks previously factored into oil prices.
IG market strategist Yeap Jun Rong highlighted that with the rising probability of a ceasefire in the Middle East, the upside potential for oil prices appears limited for the moment.
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