Having registered a seven-day streak of gains, futures on US West Texas Intermediate Crude Oil retreated on Thursday, as demand concerns related to possible winter period slowdown countered prospects of tighter supply from extended output cuts.
WTI Futures had risen earlier this week after Saudi Arabia and Russia extended voluntary production cuts to the end of the year.
Those cuts came on top of reductions agreed by several OPEC+ members in April that will run to the end of 2024.
“At present, it is really difficult for us to see any negative factors due to supply constraints. However, we need to consider possible demand risks such as in the fourth quarter, the market could slow into an off peak season for oil consumption after summer demand ends,” CMC Markets analyst Leon Li was quoted as saying by Reuters.
However, market gains were restrained by concerns over surging oil production from Iran and Venezuela.
“OPEC+ action is being partially undermined by the return of sanctioned barrels from Iran. Iranian crude production has ranged higher in the year-to-date, reaching 2.83 million barrels per day (bpd) in July, up from 2.55 million bpd in January,” BMI research analysts noted in a report.
“We also note upside risk to our Venezuelan production forecast, with U.S. officials reportedly drafting proposals to ease sanctions if Caracas progresses plans to hold new presidential elections,” the analysts pointed out.
Meanwhile, the most recent data by the American Petroleum Institute showed that US crude oil inventories had decreased by 5.521 million barrels during the week ending September 1st, following an 11.486 million barrel draw in the prior week. Analysts on average had expected a smaller decrease – by 1.429 million barrels.
As of 9:32 GMT on Thursday WTI Crude Oil Futures for October delivery were losing 0.80% to trade at $86.84 per barrel.
At the same time, Brent Oil Futures for November delivery were losing 0.75% on the day to trade at $89.92 per barrel.