Oil prices dipped on Thursday as demand concerns tied to a global economic slowdown overshadowed a pending fall in supply with Saudi Arabia’s pledged output cuts.
Brent crude futures fell 21 cents, or 0.3%, to $76.74 a barrel at 0415 GMT, while U.S. West Texas Intermediate crude futures eased 21 cents, or 0.3%, to $72.32 a barrel.
Both benchmarks settled up by about 1% on Wednesday, supported by Saudi Arabia’s plans for deep output cuts, though price gains remain capped by rising U.S. fuel stocks and weak Chinese export data.
“Oil prices have been attempting to recover lately but it has been a struggle,” said Yeap Jun Rong, market strategist at IG.
“A tighter supply but weaker demand outlook could continue to keep oil prices within its wide ranging pattern since the start of the year, with immediate resistance at the $80 level for Brent crude,” Yeap added.
A larger-than-expected build in U.S. fuel inventories reported on Wednesday raised concerns over demand from the world’s top oil consumer, especially as travel was expected to have grown during the Memorial Day weekend.
Gasoline inventories climbed by 2.7 million barrels in the week, the EIA said Wednesday, higher than analyst expectations for a 880,000 barrel rise.
Distillate stockpiles rose by nearly 5.1 million barrels in the week, exceeding analyst predictions of a 1.3 million barrel rise.
“We considered substantially lowering our oil price deck in the absence of OPEC+ action last Sunday, but even a 1 million barrel/day cut looks unlikely to underpin a sustainable price increase,” Citi analysts said on Thursday.
“Both OPEC and IEA forecasts have had an air of wishful thinking about accelerating demand growth by year-end,” the analysts added.
Meanwhile, U.S. crude inventories unexpectedly fell by 451,000 barrels in the week, as refiners churned out fuel to the highest level since 2019 during the Memorial Day holiday.