Oil prices fell for the fifth consecutive session on Thursday, driven down by persistent concerns over global demand despite a recent decline in U.S. fuel inventories.
The decline in prices reflects growing anxiety among investors about future oil consumption, overshadowing the positive signal from reduced stockpiles.
Brent crude oil, the international benchmark, slipped 10 cents to $75.95 per barrel, while U.S. West Texas Intermediate (WTI) crude oil dropped 23 cents to $71.70.
The downward pressure on oil prices comes amid a slew of troubling economic data.
Recent revisions to U.S. employment statistics revealed fewer jobs added in 2024 than initially reported, suggesting a slower-than-expected economic recovery.
Meanwhile, weak economic indicators from China, the world’s second-largest economy and largest oil importer, have further compounded fears of reduced global demand for oil.
Adding to the bearish sentiment, investors are speculating that the Organization of the Petroleum Exporting Countries (OPEC) and its allies, known collectively as OPEC+, may ease their voluntary output cuts in October.
This anticipated increase in supply could exacerbate the current price decline.
“Weak global demand and the potential for OPEC+ to lift production cuts are creating downward pressure on oil prices,” said Priyanka Sachdeva, a senior market analyst at Phillip Nova.
“Geopolitical risks, including the ongoing conflict in the Middle East, have also contributed to market uncertainty, although the recent easing of concerns regarding the Israel-Gaza war has reduced some of the geopolitical risk premium.”
Despite a recent U.S. government report showing declines in crude, gasoline, and distillate inventories for the week ending August 16, prices have continued to fall.
Analysts attribute this to subdued demand for middle distillates and disappointing oil import data from China, which has overshadowed the positive inventory figures.
Citi analysts noted, “Despite inventory draws across key major products, weak Chinese oil import data and lower demand in the U.S. have diminished the geopolitical risk premium for the oil complex.”
As the market looks ahead, the potential for a ceasefire in the Middle East and ongoing economic uncertainties in the U.S. suggest that oil prices may remain volatile.
“With the likelihood of a ceasefire increasing and economic conditions not yet supportive of a stronger oil demand outlook, the upside for oil prices appears limited for now,” said IG market strategist Yeap Jun Rong.