NEW YORK: Oil prices were down more than 1% on Thursday as a forecast for ample supply in the oil market offset optimism stemming from growing expectations of a U.S. interest rate cut.
Brent crude futures were down 96 cents, or 1.31%, at $72.56 a barrel by 11:30 a.m. EST (1630 GMT). U.S. West Texas Intermediate crude futures were down $1.05, or 1.49%, at $69.24.
The International Energy Agency (IEA) said it expected the oil market to be comfortably supplied next year, even as it made a slight upward revision to its demand outlook for next. OPEC cut its demand growth forecast for 2024 for the fifth straight month on Wednesday and by the largest amount yet.
“They (the IEA) still call for a massively oversupplied market, but this has declined slightly with their demand revision,” said UBS commodities analyst Giovanni Staunovo.
“The market is waiting for more news on fiscal measures around the world; I wouldn’t expect big price moves in the near term.”
Also putting pressure on prices, Iran agreed to tougher monitoring by the U.N. nuclear watchdog at its Fordow site dug into a mountain after it greatly accelerated uranium enrichment to close to weapons grade there.
In the U.S., inflation rose slightly in November, in line with economists’ expectations. Investors are broadly expecting another rate cut from the Federal Reserve, spurring some optimism about economic growth and energy demand.
“The inflation report creates a lot of comfort. It could have been better, but it seems to be low enough for the Fed to reduce rates at the next meeting,” said Bjarne Schieldrop, chief commodities analyst at SEB.
In the world’s top oil consumer, the United States, gasoline and distillate inventories rose by more than expected last week, Energy Information Administration data showed.
Weak demand, particularly in top importer China, and non-OPEC+ supply growth were two factors behind the move. However, investors expect a rise in Chinese demand after Beijing announced plans this week to adopt looser monetary policy in 2025, which could spur oil demand.
Global oil demand rose at a slower than expected rate this month but has remained resilient, JPMorgan analysts said in a note on Thursday.
Chinese crude imports also grew annually for the first time in seven months in November, up more than 14% from a year earlier.
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