On Thursday, oil prices dropped more than $1, adding to the previous session’s steep losses as an unreliable demand picture outweighed any positive impact from an OPEC+ panel that continued to support oil output restrictions to preserve tight supply.
By 1045 GMT, Brent crude oil futures had down $1.19 to $84.62 per barrel, while U.S. West Texas Intermediate crude had fallen $1.31 to $82.91.
After a meeting of the OPEC+ panel, which consists of the Organization of the Petroleum Exporting Countries and allies led by Russia, fuel demand destruction and a bleaker macroeconomic picture came into focus, causing oil to close more than $5 down on Wednesday, its worst daily decline in more than a year.
The OPEC+ ministerial panel did not alter the group’s policy on oil output, and Saudi Arabia announced it would maintain a voluntary export cap of 300,000 barrels per day (bpd) until the end of December, while Russia would maintain a voluntary export cap of 1 million barrels per day (bpd) until the end of 2023.
To combat the high domestic gasoline and diesel prices, the Kremlin also stated on Thursday that there was no timeline for easing the restriction on fuel exports.
Through the fourth quarter, “we continue to see the market in deficit and the softer prices reduce the probability OPEC will ease supply constraints,” wrote analysts at National Australia Bank in a report.
Conversely, a poll that showed demand declining in September at the sharpest rate in almost three years as consumers reined in spending amid rising borrowing rates and prices suggests that the eurozone economy likely contracted last quarter.
The most recent data also revealed a dramatic drop in American gasoline demand. According to the U.S. Energy Information Administration (EIA), finished motor gasoline supply, a proxy for demand, dropped this week to roughly 8 million bpd, its lowest level since the beginning of this year.
“There is some pain for the bulls lately as the tailwinds were not as dominant as previously,” said Yeap Jun Rong, a market strategist at IG. “The three-month surge in crude oil prices has been riding on the narrative of tighter supply dynamics and solid global economic conditions.
Given the less solid demand picture, Wednesday’s poorer U.S. economic figures, and a big increase in gasoline stocks, he continued, oil prices will find it difficult to rise.
Although new orders reached a nine-month low in September, the expansion rate in the U.S. services sector was consistent with forecasts for strong third-quarter economic growth.
On Thursday, the Turkish energy minister announced that a crude oil pipeline from Iraq via Turkey, which had been shut down for around six months, is now available for use.
Comment Template