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Oil prices traded flat on Thursday as investors remained cautious about geopolitical tensions in the Middle East and awaited more information on China’s economic stimulus plans. Traders were also looking ahead to the release of U.S. oil inventory data for further market direction.
Brent crude futures dipped by 4 cents to $74.18 a barrel, while U.S. West Texas Intermediate (WTI) crude futures edged down by 2 cents to $70.37 a barrel by 0648 GMT. Both benchmarks have been under pressure, with prices having declined to their lowest levels since October 2 for two consecutive sessions. This week alone, oil prices have fallen by 6-7%.
OPEC and IEA Demand Forecasts Weigh on Prices
The drop in prices this week was triggered by reduced demand forecasts from the Organization of the Petroleum Exporting Countries (OPEC) and the International Energy Agency (IEA) for 2024 and 2025. These cuts in demand outlooks, combined with eased concerns over Middle East supply disruptions, have put pressure on the oil market. While fears of a retaliatory Israeli strike on Iran subsided somewhat, uncertainty over the ongoing conflict continues to influence market sentiment.
China’s Stimulus and Middle East Tensions in Focus
Investors are closely watching China for more details on the broad economic stimulus plan announced on October 12. On Thursday, China expanded its “white list” of housing projects eligible for financing and increased bank lending to 4 trillion yuan ($562 billion) to support the struggling property sector. Market participants are also monitoring developments in the Middle East, where Israel’s response to Iranian-backed groups remains a significant focus.
Additionally, Iranian authorities are working to manage an oil spill off Kharg Island, a vital oil export terminal, according to reports from Iran’s IRNA news agency.
U.S. Oil Inventory Data Awaited
The market is also waiting for the release of official U.S. oil inventory data from the Energy Information Administration (EIA), expected later on Thursday. According to preliminary data from the American Petroleum Institute (API), crude oil stocks fell by 1.58 million barrels last week, contrary to analysts’ expectations of a build-up of 1.8 million barrels. Gasoline and distillate inventories also posted significant declines, with drops of 5.93 million and 2.67 million barrels, respectively.
The EIA’s data is set to be released at 11 a.m. EDT (1500 GMT), which could further impact market dynamics.
Supporting Factors: ECB Rate Cuts
Adding some support to oil prices, the European Central Bank is expected to implement a back-to-back interest rate cut on Thursday, marking the first consecutive rate reductions in 13 years. This shift from inflation control to supporting economic growth in the eurozone may influence broader market sentiment.
