Oil prices experienced a slight decline on Thursday following unexpected data revealing an increase in U.S. crude inventories. Brent oil futures for August delivery dropped 0.5 percent to settle at $82.24 per barrel, while West Texas Intermediate crude futures also fell by the same percentage to $77.76 per barrel by 21:31 ET (01:31 GMT).
The downturn in oil prices was compounded by the International Energy Agency (IEA) revising down its 2024 oil demand growth forecast and highlighting concerns over a potential surplus in supply. According to official reports, U.S. crude inventories surged by 3.7 million barrels in the first week of June, contradicting expectations of a 1.2 million barrel drawdown. The buildup in distillates and gasoline stocks further raised alarms about weakening summer fuel demand.
Despite these bearish indicators, larger declines in oil prices were mitigated by a weakening U.S. dollar, which followed softer-than-expected inflation data. The Federal Reserve’s cautious stance on interest rate cuts also influenced market sentiment, with the central bank reducing its outlook for rate reductions in 2024 amid persistently high inflation levels.
The IEA’s monthly report underscored a nuanced outlook, trimming its forecast for global oil demand growth in 2024 by 100,000 barrels per day to 960,000 barrels per day. The agency also projected a peak in global oil demand by 2029, followed by a contraction in subsequent years, while anticipating increased supply from non-OPEC regions to contribute to a potential oversupply situation.
In contrast, OPEC maintained its demand outlook unchanged, asserting that any adjustments to production levels would hinge on market conditions and oil prices. Earlier intentions to ease supply cuts met with market skepticism, prompting the organization to proceed cautiously.
Overall, oil markets remain influenced by a complex interplay of factors including supply dynamics, economic indicators, and central bank policies, all of which shape the trajectory of oil prices amid global economic uncertainties.
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