Oil prices dropped on Thursday due to concerns about weakening U.S. demand and oversupply, which overshadowed geopolitical tensions in the Middle East and Ukraine. By 1139 GMT, Brent crude futures had decreased by 63 cents, or 0.9%, to $66.86 per barrel, while U.S. West Texas Intermediate crude fell by 68 cents, about 1.1%, to $62.99. This decline followed a previous increase of over $1 per barrel, spurred by Israel’s recent military action against Hamas and NATO’s defense measures in Poland.
The International Energy Agency reported that global oil supply is expected to rise faster than anticipated, as OPEC+ members increase production alongside growing supplies from outside the group, against a backdrop of limited demand expansion. Analyst Tamas Varga noted that the market is caught between perceived supply shortages due to geopolitical tensions and actual oversupply reflected in rising OPEC+ output and increasing U.S. inventories.
The Energy Information Administration revealed a rise of 3.9 million barrels in U.S. crude inventories, contrary to expectations of a decrease. Additionally, expectations of Federal Reserve interest rate cuts have led traders to adopt a cautious approach ahead of the U.S. inflation report, which could further influence market dynamics. OPEC+ has recently decided to boost production starting in October, with the organization set to release its monthly oil market report later today.