After a turbulent opening to the week, oil markets had a bit of a breather on Thursday. Investors, who are still processing a jumble of bearish data and global supply chain disruptions, saw prices reclaim some of the lost ground after losses the day before. Concerns remain high as the economy shows signs of trouble, and changes in oil supply are making traders uneasy.
Brent crude futures were up 23 cents, 0.35%, at $65.09 a barrel by midday. West Texas Intermediate (WTI) crude was up 16 cents, or 0.25%, at $63.01. Those small gains came after a more than 1% drop on Wednesday, set off by an unexpected surge in U.S. fuel inventories.
American gasoline supplies leapt by 5.2 million barrels last week, and distillates, including diesel, increased by 4.2 million barrels, both far exceeding forecasts. The figures suggest that demand in the world’s largest oil-consuming nation is slowing, sparking fears about future consumption habits.
Compounding the pressure on the market, Saudi Arabia, the world’s largest oil exporter, slashed July prices for its Asian customers to the lowest levels in almost two months. That move, which appeared to be an effort to keep pace with increasing flows of oil from OPEC+, tumbled the alliance’s weekend decision to increase output by 411,000 barrels a day.
However, there are not yet overwhelming signs of oversupply. Fires in Canada’s Alberta province have curtailed 350,000 barrels a day of production from the oil sands, around 7% of the country’s total output. These stoppages in supply have helped avoid a sharper price fall.
Elsewhere, the wider political and economic context complicates things further. The market has become increasingly sensitive to headlines in recent months, as tensions in the Middle East persist and trade friction between the U.S. and China continues. Analysts said the focus would be on U.S. jobs data and inflation indicators in the next two weeks, as they could influence interest rate expectations in the world’s largest economy and therefore affect global oil demand.
