Oil prices edged lower on Thursday as concerns over weakening United States demand and rising supply outweighed geopolitical risks linked to tensions in the Middle East and Russia’s war in Ukraine.
By 3:05 pm AEST (5:05 am GMT) Brent crude futures were down 13 cents or 0.2% to US$67.36 per barrel, while U.S. West Texas Intermediate (WTI) crude fell 13 cents or 0.2%, to $63.54 per barrel.
The losses followed a rally of 1.7% on Wednesday after Israel’s strike on Hamas leadership in Qatar and Poland’s deployment of air defences alongside NATO to intercept suspected Russian drones that crossed into its airspace during attacks on western Ukraine.
ANZ analysts noted: "The incursion of Russian drones into Polish airspace raised concerns that the US would retaliate with further restrictions on Russia’s energy supplies."
The rally had extended a broader upward trend earlier this month, after oil prices hit a three-month low on 5 September.
However, traders said neither the Middle East flare-up nor the drone incident posed immediate risks to supply, shifting market focus back to fundamentals.
The Energy Information Administration reported that US crude inventories rose by 3.9 million barrels in the week to 5 September, defying expectations for a 1.1 million-barrel draw.
Gasoline stocks also climbed by 1.5 million barrels, against forecasts for a 100,000-barrel decline. The data pointed to softening demand in the world’s largest oil consumer.
At the same time, broader economic signals added to market caution, with falling producer prices and signs of a slowing labour market underlining concerns about weakening U.S. growth.
On the supply front, the Organization of the Petroleum Exporting Countries and its allies, known as OPEC+, confirmed on Sunday that they would raise production from October.
While the increase was smaller than in prior months and below some expectations, the move still added downward pressure on crude markets.
The Energy Information Administration warned this week that oil prices are set to fall significantly in the months ahead as rising output drives substantial inventory builds.
