Written by The Banking Post
Oil prices eased on Thursday as signs of weakening US demand and rising inventories stoked oversupply worries. However, geopolitical risks in the Middle East and Russia’s war in Ukraine helped cap the decline.
Brent crude fell 11 cents to $67.38 a barrel by 0618 GMT, while US West Texas Intermediate (WTI) dropped 13 cents to $63.54. Both benchmarks had gained more than $1 the previous day after Israel struck Hamas leadership in Qatar and Poland activated air defences against suspected Russian drones near its border.
Analysts noted that neither incident posed an immediate threat to oil supplies, shifting attention back to supply-demand dynamics. US crude inventories rose by 3.9 million barrels last week, against expectations of a draw, while gasoline stocks also climbed. The build-up followed the end of the US summer driving season, intensifying oversupply fears.
“Oil prices came under pressure from profit-taking after a three-day rally, combined with higher US inventories,” said Tony Sycamore, a market analyst. “Traders are also cautious ahead of the US inflation report, which could alter expectations of Federal Reserve rate cuts.”
The US economy is showing signs of cooling, with easing labour market conditions bolstering expectations that the Fed will cut rates next week. Some economists even suggest a larger move could be on the table. Meanwhile, the European Central Bank is expected to hold rates steady on Thursday.
Adding to the bearish outlook, OPEC+ announced it would raise production from October, though at a slower pace than in previous months. The Energy Information Administration warned that higher output could drive significant inventory builds and weigh on prices in the coming months.
