– Brent nearly $20 a barrel lower than September peak
– Brent and WTI benchmarks hit lowest since July on Wednesday
– OPEC to discuss 2024 output policy later this month
Houston — The Brent crude oil benchmark hovered above $80 a barrel on Thursday, after demand concerns and a fading war-risk premium triggered a sell-off this week.
Brent crude futures were up 71 cents, or about 0.91%, at $80.26 a barrel by 11:57 a.m. CDT (1757 GMT). U.S. West Texas Intermediate (WTI) crude futures gained 69 cents, about 0.92%, to $76.02.
Both benchmarks dropped to their lowest since mid-July on Wednesday as concern over supply disruptions in the Middle East eased and expectations U.S. and Chinese demand will weaken intensified.
While risk has increased since the Oct. 7 attack by Hamas, fundamentals have prevailed repeatedly as supply disruption fears have not been realized, said Jim Burkhard, vice president and head of research for oil markets at S&P Global Commodity Insights.
“The onset of the Israel-Hamas war does fuel volatility and bring additional risks, but it has not affected underlying oil market fundamentals,” Burkhard said. “Oil prices have remained below where they were in late September – a week before the Hamas attack. Strong oil market fundamentals are prevailing over any fears at the moment.”
Thursday’s gains were signs the markets were re-orienting to fundamental supply-demand issues, Phil Flynn, analyst at Price Futures Group, said.
“I think we’re seeing the market saying the sell-off was overdone,” Flynn said.
Brent is nearly $20 a barrel lower than its September peak.
Data from China on Thursday showed policymakers struggling to control disinflation, casting doubt over the chances of a broad-based economic recovery in the world’s biggest commodity consumer.
Earlier in the week customs data showed that China’s total exports of goods and services contracted faster than expected.
Demand indicators also imply weakness in the United States.
U.S. crude oil inventories increased by 11.9 million barrels over the week to Nov. 3, sources said, citing American Petroleum Institute figures.
If confirmed, this would represent the biggest weekly build since February. The U.S. Energy Information Administration (EIA), however, has delayed release of weekly oil inventory data until Nov. 15 for a system upgrade.
Global markets, however, were upbeat on Thursday on the belief that major central banks have completed their rate hikes. High interest rates raise the cost of borrowing, dampening demand in markets, including oil.
Both OPEC and the International Energy Agency (IEA) are due to offer their view on the state of oil demand and supply fundamentals next week.
OPEC is set to meet at the end of the month to discuss output policy for 2024.
*Erwin Seba; Natalie Grover, Andrew Hayley & Jeslyn Lerh, editing: Kirsten Donovan, Barbara Lewis & David Evans – Reuters