Oil prices fell on Thursday as demand concerns over the global economic slowdown failed to take Saudi Arabia’s promised production cuts seriously.
Brent crude futures fell 21 cents, or 0.3%, at 0415 GMT to $76.74 a barrel, West Texas Intermediate (WTI) crude futures eased 21 cents, or 0.3%, to $72.32 a barrel.
Oil prices have been struggling to recover recently. Both indicators rose nearly 1% on Wednesday, supported by Saudi Arabia’s plans for deep production cuts, but price gains continue to be capped by rising US fuel stocks and weak Chinese export data.
The resistance level for Brent crude can be considered to be around $80 as tighter supply conditions but a weaker demand outlook continues to keep oil prices in a wide range since the beginning of the year.
A larger-than-expected increase in US fuel stockpiles reported on Wednesday has raised concerns about demand from the world’s largest oil consumer, especially as travel activity is expected to increase over the Memorial Day weekend.
The U.S. Gasoline inventories rose 2.7 million barrels per week, beating analysts’ expectations for an increase of 880,000 barrels, the Energy Information Administration (EIA) said on Wednesday. Distillates inventories increased by about 5.1 million barrels per week, beating analysts’ estimates for a 1.3 million barrel increase.
Before OPEC+’s action last Sunday, the oil price forecast was down significantly, but even a 1 million barrels per day cut seems unlikely to support a sustained price increase.
Analysts say both OPEC and IEA forecasts and efforts are wishful thinking about accelerating demand growth through the end of the year.
Meanwhile, US crude inventories unexpectedly fell by 451,000 barrels per week as refineries entered their highest fuel production cycle since 2019 due to the Memorial Day holiday.