NEW YORK: Oil prices eased in Asian trade on Thursday, retreating from a seven-week high reached in the prior session as some investors took money off the table due to uncertainty around the supply-demand outlook.
Brent futures slipped 26 cents, or 0.4percent, to USD69.05 a barrel by 0350 GMT, while US West Texas Intermediate (WTI) crude futures fell 27 cents, or 0.4 percent, to USD64.72 a barrel.
Both benchmarks gained 2.5 percent on Wednesday to their highest levels since August 1, driven by a surprise drop in US weekly crude inventories and concerns Ukraine’s attacks on Russia’s energy infrastructure could disrupt supplies.
“Oil looks to be hitting a ceiling, with softer (seasonal) demand and rising OPEC+ supplies into Q4. Recent gains feel more sentiment-driven than fundamental, so unless a new shock emerges, Brent is likely to consolidate with a slight downside bias,” said Priyanka Sachdeva, senior market analyst at Phillip Nova.
Sachdeva noted some profit-taking in morning deals, adding that the return of Kurdish supplies is reigniting “fears of an oversupply narrative, propelling a pullback in prices” from near 7-week highs.
Oil flows from Iraqi Kurdistan were expected to restart in days, after eight oil firms came to an agreement on Wednesday with Iraq’s federal and Kurdish regional government to resume exports. While some market concerns remained on Russian supply disruptions, Haitong Securities said in a report that another key factor behind oil’s resilience was the lack of significant downward pressure from supply–demand fundamentals in recent weeks.
As the peak demand season gradually ends, expectations of mounting oversupply pressures have yet to be reflected in prices, the report said.
Underscoring investor cautiousness on demand, a J.P. Morgan report on Wednesday said that US air passenger throughput for September indicates only a modest 0.2 percent increase year-on-year, a notable slowdown from the robust 1percent growth in each of the previous two months. “Likewise, US gasoline demand has started to pull back, mirroring the broader moderation in travel trends,” the JP Morgan analysts said.
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