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Oil prices edged down on Thursday, retreating from the previous session’s seven-week high, as some investors took profits after US stocks closed lower and in anticipation of slower winter demand as well as the return of Kurdish supplies.
Brent futures were down 49 cents, or 0.7 per cent, to $68.82 a barrel at 0825 GMT, while US West Texas Intermediate futures were down 54 cents, or 0.8 per cent, to $64.45 a barrel.
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Both benchmarks gained 2.5 per cent on Wednesday to reach their highest since August 1, driven by a surprise drop in US weekly crude inventories and concerns that Ukraine’s attacks on Russia’s energy infrastructure could disrupt supplies.
“We have a generally risk-off market,” said Giovanni Staunovo, commodity analyst at UBS. Two consecutive down days for US stocks are putting pressure on oil prices, he added.
Bearish expectations on supply fundamentals, with more oil expected soon from Iraq and Kurdistan, weighed further.
“The return of Kurdish supplies adds back fears of an oversupply narrative, propelling a pullback in prices that hover near a seven-week high,” said Priyanka Sachdeva, senior market analyst at Phillip Nova.
Oil flows from Iraqi Kurdistan were expected to restart in days after eight oil firms struck a deal on Wednesday with Iraq’s federal and Kurdish regional governments to resume exports.
While some market concerns remain on Russian supply disruptions, Haitong Securities said in a report that another factor behind oil’s resilience was the lack of significant downward pressure from supply–demand fundamentals in recent weeks.
As the peak demand season gradually ends, prices have yet to reflect expectations of mounting oversupply pressures, it added.
Underscoring investor cautiousness on demand, J.P. Morgan analysts said on Wednesday that US air passenger throughput for September indicated only a modest annual increase of 0.2 per cent, a slowdown from growth of 1 per cent in each of the two prior months.
“Likewise, US gasoline demand has started to pull back, mirroring the broader moderation in travel trends,” the analysts said in a report.
