NEW YORK: Oil prices fell to a seven-week low for the second consecutive session on Thursday, weighed by weakening global demand, rising inventories and fading hopes for an early decline in US interest rates.
Brent crude futures rose 28 cents, or 0.3%, to $83.72 a barrel by 12:55 p.m. ET (16:55 GMT). US West Texas Intermediate crude futures were up 6 cents, or 0.1%, at $79.06 per barrel.
Both benchmarks are below their 200-day moving average, the key technical indicator representing a bear market shift in crude oil, said Alex Hodes, oil analyst at StoneX.
A slump in worldwide diesel demand is feeding concerns about slowing oil demand growth in big economies, such as top oil consumer the US Gasoil stocks, which include diesel, rose by more than 3% in Europe’s Amsterdam-Rotterdam-Antwerp refining and storage hub during the week to Thursday, data from consultancy Insights Global showed.
Diesel demand in the US Gulf Coast refining hub, also called PADD 3, is estimated to be below the prior three-year range, Hodes said. “The bearish kicker is that even with these inventory builds, production of distillates in PADD 3 is at its lowest level since the start of March,” he added.
Oil prices fell more than 3% in the previous session after the US government reported a surprise jump in crude oil stocks and the Fed left interest rates unchanged, warning of stubborn inflation. Supporting prices, Organization of Petroleum Exporting Countries and allies (OPEC+) could extend output cuts if demand fails to pick up, three sources from the group told Reuters.
Traders were watching whether lower oil prices will spur the US government to replenish strategic reserves. “The oil market was supported by speculation that if WTI falls below $79, the US will move to build up its strategic reserves,” said Hiroyuki Kikukawa, president of NS Trading.
In the Middle East, expectations grew that a ceasefire agreement between Israel and Hamas could be in sight after a renewed push led by Egypt, even as Israeli Prime Minister Benjamin Netanyahu has vowed to proceed with a long-promised assault on the southern Gaza city of Rafah.