Oil prices saw a recovery on Thursday after several days of significant declines, driven by industry data indicating an unexpected decrease in U.S. inventories over the past week.
Attention remains focused on the potential escalation of conflict in the Middle East, along with expectations for further stimulus measures from China, the world’s largest oil importer.
Brent crude futures for December delivery increased by 0.6 percent to $74.67 per barrel, while West Texas Intermediate (WTI) crude futures also rose by 0.6 percent to $70.27 per barrel as of 21:02 ET (01:02 GMT). Both contracts faced substantial declines over the prior week, with losses worsening in recent sessions following downward revisions in demand growth forecasts from two major industry organizations. Additionally, reports indicated a less severe escalation of tensions between Israel and Iran, which also put downward pressure on oil prices.
U.S. inventories unexpectedly decline
Data from the American Petroleum Institute (API) revealed on Wednesday that U.S. oil inventories dropped by 1.58 million barrels during the week ending October 11, contrary to predictions of a 3.2 million barrel increase. This API report typically foreshadows a similar outcome in official inventory data, which is expected later on Thursday. This reading has raised some optimism that U.S. oil supplies remain constrained, even as adverse weather in the mid-South impacts travel demand.
However, the oil markets are still grappling with two weeks of significant increases in U.S. inventories.
Read more: Oil prices recover modestly amid Middle East stability concerns, weak demand
Demand concerns weigh on oil prices
Oil prices have seen declines between 5 percent and 6.5 percent over the past week, largely due to fears surrounding weak demand and a report suggesting that Israel’s response to Iran might not be as severe as initially anticipated.
Additionally, disappointing signals regarding stimulus efforts in China have further pressured oil prices, as Beijing has provided limited details on the timing and scale of its recently announced fiscal measures. A briefing is set for later on Thursday to outline plans aimed at supporting the property market.
Concerns about sluggish demand were amplified by both the International Energy Agency (IEA) and the Organization of the Petroleum Exporting Countries (OPEC) revising down their forecasts for global oil demand growth in the coming years, with both organizations highlighting weaknesses in China as their primary concern.
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