Oil down on negative US economic expectations

ANKARA

Oil prices declined on Thursday due to demand concerns after the downgrade of the US’ credit rating and supply fears as investors await the OPEC+ meeting on Friday, despite a substantial decrease in US stockpiles signaling rebounding demand.

International benchmark Brent crude traded at $82.81 per barrel at 10.43 a.m. local time (0743 GMT), a 0.47% loss from the closing price on Wednesday of $83.20 per barrel.

The American benchmark West Texas Intermediate (WTI) traded at the same time at $79.03 per barrel, down 0.57% from the session close of $79.49 per barrel on Wednesday.

Both prices had been trading at multi-month highs on expectations of tighter supply; however, steep declines were recorded from around $85 a barrel to $82.70 a barrel.

At the July meeting of the Organization of the Petroleum Exporting Countries (OPEC) and its allies led by Russia, known as OPEC+, some member countries led by Saudi Arabia and Russia decided to voluntarily cut output to ensure market stability.

Market players are now awaiting another OPEC+ meeting that is set for Friday, when analysts expect a decision will be made to keep the group’s output policy unchanged.

Saudi Arabia’s decision to cut by 1 million barrels per day (bpd) in August was a rollover from the previous month, and a further extension is also possible.

A hefty decline in US crude oil inventories fueled price increases, reflecting an increase in demand in the world’s top oil consumer. Meanwhile, Fitch’s decision to downgrade the US’ credit rating due to fiscal deterioration dismayed market participants.

According to data released by the Energy Information Administration (EIA) on Wednesday, US commercial crude oil inventories fell by around 17 million barrels to 439.8 million barrels, against the American Petroleum Institute’s expectation of a drop of around 15.4 million barrels.

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• WTI