August 22 (Reuters) – Oil prices continued their decline for the fifth straight session on Thursday, driven by worries about global demand despite a drop in U.S. fuel inventories.
Brent crude futures edged down by 10 cents to $75.95 per barrel. At the same time, U.S. West Texas Intermediate (WTI) crude futures fell by 23 cents to $71.70, as of 0639 GMT.
Since August 15, the front-month WTI contract for October has decreased by 6.9%, and Brent futures have dropped by 6.4%. This decline follows a report on Wednesday showing that fewer jobs were added in the U.S. in 2024 than previously estimated. The U.S. is the world’s largest oil consumer. Additionally, weak economic data from China, the world’s second-largest economy and biggest oil importer, has contributed to the price drop.
Investors are also anticipating that the Organization of the Petroleum Exporting Countries (OPEC) and its allies, known as OPEC+, may ease some of their voluntary output cuts in October, potentially increasing supply.
“Weak global demand and concerns that OPEC+ might reverse their production cuts are weighing on oil prices,” said Priyanka Sachdeva, a senior market analyst at Phillip Nova. She added that ongoing conflicts in the Middle East and other geopolitical tensions are also adding to market uncertainties.
Fears about how OPEC+ production cuts will affect the market in the fourth quarter if they are lifted have intensified price weaknesses. ING analysts noted that the downward pressure on prices makes it increasingly likely that OPEC+ may need to reconsider their plan to gradually increase supply from October. Failure to do so could put further pressure on prices.
Crude prices have been declining despite a U.S. government report showing reductions in U.S. crude, gasoline, and distillate inventories for the week ending August 16, alongside increased refinery runs.
“Despite reductions in key inventories, weak Chinese oil import data and subdued demand for middle distillates in the U.S. have lowered the geopolitical risk premium for oil,” said Citi analysts.
Recent concerns over the Israel-Gaza conflict have eased somewhat, as the U.S., Israel, and Hamas attempt to negotiate a ceasefire, though earlier diplomatic efforts this week did not yield a truce.
“Oil’s potential for gains seems limited for now, with rising chances of a ceasefire in the Middle East reducing some geopolitical risks,” said IG market strategist Yeap Jun Rong. “Economic conditions in the U.S. might support upcoming policy adjustments but do not offer much reassurance for stronger oil demand at this time,” he added.