WionDrive News Desk 
In a continuing trend that has raised concerns among market analysts, global oil prices experienced their fifth consecutive day of decline on Thursday. This persistent downturn comes despite a reported decrease in U.S. fuel inventories, highlighting the overarching influence of global demand worries on market sentiment.
As of 0433 GMT, Brent crude futures, the international benchmark for oil prices, dipped by 9 cents to USD 75.96 per barrel. Concurrently, U.S. West Texas Intermediate (WTI) crude futures saw a more pronounced decrease, falling 19 cents to trade at USD 71.74 per barrel. The decline has been significant over the past week, with the front-month WTI contract for October delivery registering a 6.9% drop since August 15, while Brent futures have fallen by 6.4% in the same period.
The downward pressure on oil prices can be attributed to a confluence of factors, chief among them being recent economic data from major oil consumers. A revised report on U.S. employment statistics revealed that fewer jobs were added in 2024 than previously estimated, casting a shadow over the economic outlook of the world’s largest oil consumer. This data, coupled with weak economic indicators from China – the second-largest economy and the biggest oil importer globally – has intensified concerns about future oil demand.
Adding to the bearish sentiment is the anticipation that the Organization of the Petroleum Exporting Countries and its allies (OPEC+) may lift some of their voluntary output cuts in October. This potential increase in supply comes at a time when the market is already grappling with demand uncertainties, further exacerbating downward price pressures.
Priyanka Sachdeva, a senior market analyst at Phillip Nova, commented on the situation, stating, “Weak global demand and the potential threat of OPEC+ rolling back on their production cuts are weighing on oil.” However, Sachdeva also noted that ongoing conflicts in the Middle East and geopolitical tensions continue to pose upside risks to prices.
The persistent price weakness has led some analysts to speculate that OPEC+ may need to reconsider its plans for gradually increasing supply from October. ING analysts suggested in a client note that failing to pause or reverse the planned production increases could lead to further price deterioration.
Interestingly, the price slump persists despite a U.S. government report indicating decreases in crude, gasoline, and distillate inventories for the week ending August 16, alongside an increase in refinery runs. Citi analysts attribute this counterintuitive trend to weak Chinese oil import data and subdued middle distillate demand in the U.S., which have collectively reduced the geopolitical risk premium typically associated with oil prices.
The geopolitical landscape, particularly concerning the Israel-Gaza conflict, has also evolved in recent days. Diplomatic efforts to broker a ceasefire between Israel and Hamas have intensified, with the United States playing a key role in negotiations. While a truce remains elusive, the prospect of a potential resolution has contributed to easing some of the geopolitical tensions that had previously supported oil prices.
IG market strategist Yeap Jun Rong summarised the current market dynamics, noting, “Upside catalysts for oil may seem limited for now, with rising odds of a ceasefire in the Middle East, which saw market participants pricing out some of the geopolitical risks.”
