Oil prices held steady on Thursday as worries over softening US demand and broad oversupply risks were offset by concerns over attacks in the Middle East and the Russian war in Ukraine.
Brent crude futures were down 21 cents, or 0.3 per cent, at $67.28 a barrel by 0911 GMT while US West Texas Intermediate crude futures lost 26 cents, or 0.4 per cent, to $63.41.
The benchmark contracts gained more than $1 each on Wednesday after Israel’s attack on Hamas leadership in Qatar the previous day and the mobilisation of Polish and NATO air defences to shoot down suspected Russian drones that had strayed into Poland’s airspace during an attack on western Ukraine.
However, the International Energy Agency said in its monthly report that world oil supply will rise more rapidly than expected this year as OPEC+ members increase output further and supply from outside the group grows, with limited expansion in demand.
“Our market is torn between perceived supply shortage due to the rise in tension in the Middle East and Ukraine and actual oversupply as reflected in rising OPEC+ production and swelling stocks implied in the weekly and monthly EIA reports,” PVM Oil Associates analyst Tamas Varga said.
While the uncertainty around secondary sanctions against Russian oil buyers China and India also puts a floor under the market, prices should resume their fall once those tensions ease, he added.
US crude inventories rose by 3.9 million barrels in the week to September 5, the Energy Information Administration said, against expectations of a draw of 1 million barrels.
A softer US economy, meanwhile, has raised expectations that the Federal Reserve will cut interest rates next week.
“Traders are taking a more cautious stance ahead of the upcoming US inflation report (later on Thursday), with expectations of more significant Federal Reserve rate cuts already factored in, which could be unsettled by a warmer than expected CPI report,” said IG market analyst Tony Sycamore.
The Organization of the Petroleum Exporting Countries and allies, a group collectively known as OPEC+, on Sunday decided to raise production from October. OPEC is due to issue its monthly oil market report later on Thursday.
