Shafaq News/ Oil prices declined in early trading on Thursday, influenced by disappointing economic indicators from significant economies. Investors eagerly await a forthcoming speech by U.S. Federal Reserve Chair Jerome Powell on Friday, seeking insights into potential interest rate changes.
According to Reuters data, Brent crude slid by 26 cents or 0.3% to $82.95 a barrel as of 0359 GMT, while U.S. West Texas Intermediate (WTI) crude dropped 30 cents or 0.4% to reach $78.59 a barrel.
Analysts noted that recent manufacturing data derived from purchasing managers' index (PMI) surveys painted a worrisome picture of global economic health, leading to concerns about future oil demand.
Japan experienced a third consecutive month of shrinking factory activity in August. The Eurozone witnessed a more substantial decline than anticipated in business activity, particularly in Germany. Britain's economy faces the risk of recession as it appears poised to shrink in the current quarter.
Similarly, U.S. business activity approached a standstill in August, with its weakest growth since February.
While attention remains fixed on economic data, key officials from the Federal Reserve, European Central Bank, Bank of England, and Bank of Japan are converging on Jackson Hole. The discussions are expected to be dominated by conversations about maintaining higher interest rates despite a dip in inflationary pressures.
Sugandha Sachdeva, Executive Director and Chief Strategist at Acme Investment Advisors attributed the downward pressure on oil prices to a combination of demand concerns and an uptick in oil supply, exacerbated by lackluster PMI readings.
State media quoted Iran's oil minister as saying that the country's crude oil output would reach 3.4 million barrels per day by the end of September, even though U.S. sanctions remain in place.
In the United States, officials are reportedly crafting a proposal to ease sanctions on Venezuela's oil sector. This would allow a broader range of companies and countries to import Venezuelan crude oil, contingent on the nation's progress toward a free and equitable presidential election.
Sachdeva remarked, "Given the significant resistance point at $83 per barrel for WTI crude, we anticipate that oil prices will continue to trade with a negative bias." She added that prices may witness some rebound but could potentially test lower levels of around $74 per barrel in the short term.
U.S. crude inventories fell by 6.1 million barrels in the week leading up to August 18, reaching 433.5 million. This decline aligned with a broader trend observed worldwide. Notably, a substantial portion of the reduction in inventories occurred in China, where state-owned refiners reported record-high monthly operating rates.
However, an increase in U.S. gasoline stocks from the previous week indicated weaker-than-expected fuel demand, suggesting potential challenges to sustained recovery.