Oil prices rose slightly on Thursday, clawing back some of the previous session’s big losses after the OPEC+ panel maintained production cuts to keep supply tight, but the uncertain demand outlook capped gains.
Brent crude futures were up 63 cents at $86.44 a barrel at 0335 GMT, while West Texas Intermediate (WTI) crude was up 49 cents at $84.71 a barrel.
Oil lost more than $5 on Wednesday after a meeting of the OPEC+ panel, a grouping of allies led by the Organization of the Petroleum Exporting Countries and Russia, on a weaker macroeconomic outlook and devastation in fuel demand.
The OPEC+ ministerial panel did not make any changes to the group’s oil production policy. Saudi Arabia said it would continue its voluntary cut of 1 million barrels per day (bpd) until the end of 2023, while Russia said it would maintain its export restriction of 300,000 bpd until the end of 2023.
The market continues to run a deficit in the fourth quarter, and lower prices make it less likely that OPEC will ease supply restrictions.
The eurozone economy likely shrank in the last quarter, according to a survey that showed demand fell at the fastest pace in almost three years in September as consumers reined in spending due to rising borrowing costs and prices.
Recent data also showed a sharp decline in US gasoline demand. Demand for gasoline supplied, a gauge of demand, fell to 8 million barrels, the lowest level since the beginning of this year, the U.S. Energy Information Administration (EIA) reported Wednesday.
Accordingly, it looks like oil prices will struggle to rise given the uncertain demand outlook, weak U.S. economic data released on Wednesday, and a significant increase in gasoline inventories.
The three-month rally in crude oil prices is based on tight supply dynamics and resilient global economic conditions, so the lack of effective downward pressure lately is creating some discomfort for bulls.
The U.S. services sector slowed in September as new orders fell to a nine-month low, but the pace remained consistent with expectations for solid economic growth in the third quarter.
