Supply-demand concerns are back in focus in the fourth quarter. Oil prices fell in Asian trading on Thursday, retreating from a seven-week high as investors withdrew funds in anticipation of a slowdown in winter demand and a return of supplies in northern Iraq.
Brent futures fell 19 cents, or 0.3%, to $69.12 a barrel by 06:37 GMT, while WTI crude futures fell 22 cents, or 0.3%, to $64.77 a barrel.
Both indices rose 2.5% on Wednesday, reaching their highest level since August 1. This rise was driven by a surprise drop in US weekly crude inventories and concerns that Ukraine’s attacks on Russian energy infrastructure could disrupt supply.
The oil prices are trading above expectations, though. Given the emergence of profit-taking at current levels and the entry into a slower winter demand period, oil prices are likely to moderate from now on.
With more oil expected to hit the market soon from Iraq, expectations of price declines related to supply fundamentals have become even more pronounced.
This influx, expected to resume within a few days, is fueling fears of oversupply and leading to a decline in prices, which are currently hovering near a seven-week high.
While some market concerns about supply disruptions in Russia persist, another key factor behind oil’s resilience has been the absence of significant downward pressure from supply-demand fundamentals in recent weeks.
Nevertheless, while the peak demand season is gradually ending, prices have not yet reflected expectations of increased oversupply pressures.
It should be noted that US air passenger transport in September on Wednesday showed a modest increase of only 0.2% year-over-year, a significant slowdown compared to the robust 1% growth recorded in the previous two months.
Similarly, gasoline demand in the US has begun to decline, reflecting a general slowdown in travel trends.