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Crude oil benchmarks failed to hold on to intraday gains and closed flat on Thursday, holding at their lowest levels of the year, as concerns about demand in the United States and China and an anticipated rise in supplies from Libya offset an unexpectedly large rise. withdrawal of US crude oil inventories and news of a OPEC+ delays entry into force of the Treaty by two months to begin undoing production cuts.
OPEC+ said it will extend additional voluntary cuts into early December rather than starting to taper in October, which should stabilize prices around $70, Peter Cardillo of Spartan Capital said, according to Dow Jones.
The decision delays the planned increase in oil production announced earlier this year, which would have seen an increase of 180,000 bbl/day starting in October.
Mizuho’s Robert Yawger was unimpressed by the move, saying “the gasoline market would be capable of driving crude oil down even if the OPEC+ chaos didn’t support it.” [the] price. If you don’t need the gasoline, you don’t need the crude oil to make the gasoline.”
Meanwhile, the US Energy Information Administration reported a larger-than-expected draw of 6.9 million barrels in US crude oil inventories for last week, largely as a result of lower imports, while gasoline stocks rose by 800,000 barrels as demand eased.
Nymex crude maturing next month (CL1:COM) for October delivery settled -0.1% at $69.15 a barrel, its lowest close since December for a third straight day, and November Brent for next-month delivery (CO1:COM) fell a penny to $72.69 a barrel, its weakest close since June 2023 for a second straight day.
Gasoline futures fell to their lowest closing level since March 25, 2021, as October Nymex RBOB gasoline (XB1:COM) due next month ended -1.8% at $1.9258/gal.
Additionally, October Nymex natural gas (NG1:COM) rose to its highest level in nearly two months. +5.1% at $2.254/MMBtu, after the EIA reported a smaller-than-expected increase of 13 billion cubic feet in inventories for last week.
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Oil price action reflects U.S. purchasing managers’ data that remains on the contractive side and labor market reports that “warn of a global recession,” NinjaTrader analyst Tom Schneider said. Market Watch.
“Concerns about a recession, supported by weakening manufacturing and labour market figures, are outweighing OPEC+ members’ intentions,” Schneider said.