Oil prices eased on Thursday regarding disappointing economic data from key economies and as investors await the speech by U.S. Federal Reserve Chair Jerome Powell on Friday to get some clues on interest rates.
Brent crude fell 19 cents or 0.2%, at 0619 GMT to $83.02 a barrel, while West Texas Intermediate crude (WTI) dropped 24 cents, or 0.3%, to $78.65 a barrel.
Analysts say manufacturing data paints a bleak picture of the health of economies around the world, raising demand concerns.
Japan reported that its factory activity shrank for the third month in a row in August. Business activity in the Eurozone also fell more than expected, especially in Germany. The British economy appears poised to shrink this quarter, putting it in danger of falling into recession.
Business activity in the US approached the recession point in August and growth was at its weakest level since February.
Meanwhile, Federal Reserve officials and policymakers from the European Central Bank, Bank of England, and the Bank of Japan are focused on Jackson Hole, where talk of higher interest rates could dominate for a longer period of time despite the decline in inflationary pressures.
The downward pressure on oil prices is largely due to negative PMI readings, as well as concerns about a potential drop in demand and increased oil supply.
On the supply side, Iran’s oil minister said Iran’s crude oil production will reach 3.4 million barrels per day (bpd) by the end of September, despite US sanctions in place.
According to some analysts, US officials are drafting a proposal that if Venezuela moves towards a free and fair presidential election, it will ease sanctions on the oil sector and allow more companies and countries to import crude oil.
While prices are likely to show some recovery, oil prices can be expected to continue trading with a negative trend, given the key resistance point of WTI crude at $83 per barrel.
U.S. crude inventories fell 6.1 million barrels a week to 433.5 million barrels on the 18th of August, compared with analysts’ expectations of a 2.8 million-barrel drop.
On the one hand, the decline in these stocks indicates that the worldwide demand is healthy. That’s because most of the drop occurred in China, where operating rates for state-owned refineries hit a record this month.
However, as a negativity, the rise in US gasoline inventories last week showed that fuel demand was weaker than expected.
