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Oil prices continued their downward trend on Thursday, marking the fifth consecutive session of declines as investors grew increasingly concerned about the global demand outlook, despite a recent decline in U.S. fuel inventories.
Price Movements and Statistics
Brent crude futures slipped by 10 cents to $75.95 per barrel, while U.S. West Texas Intermediate (WTI) crude futures fell 23 cents, trading at $71.70 as of 0639 GMT. Since August 15, the front-month WTI contract for October has dropped by 6.9%, while Brent futures have declined by 6.4% over the same period.
Factors Contributing to the Decline
The ongoing price plunge can be attributed to a combination of factors. A recent report on revised employment statistics in the U.S., the world’s largest oil consumer, indicated that fewer jobs were added in 2024 than previously estimated. This, coupled with weak economic data from China—the world’s second-largest economy and largest oil importer—has fueled concerns about global demand.
Additionally, there is speculation that the Organization of the Petroleum Exporting Countries (OPEC) and its allies, known collectively as OPEC+, may lift some of their voluntary output cuts in October, potentially adding more supply to the market. The uncertainty surrounding how OPEC+ production will unfold in the fourth quarter has further exacerbated the downward pressure on prices, although there is the possibility that these cuts could be paused or reversed if necessary.
U.S. Inventory Data and Geopolitical Developments
Despite the bearish sentiment, a U.S. government report on Wednesday showed that U.S. crude, gasoline, and distillate inventories fell in the week ending August 16, even as refinery runs increased. However, this positive data has done little to halt the overall decline in crude prices.
Geopolitical concerns, particularly those related to the Israel-Gaza conflict, have also eased over the past week. The U.S., Israel, and Hamas have been engaged in efforts to negotiate a ceasefire, although U.S. diplomatic efforts earlier this week ended without reaching a truce.
As these various factors continue to weigh on the market, oil prices remain under pressure, with investors closely monitoring any developments that could impact the global demand outlook and supply dynamics in the coming weeks.
