By Adedapo Adesanya
Brent crude price declined by $1.74 or 2.0 per cent to sell at $84.07 per barrel on Thursday as worries about fuel demand outweighed the decision to maintain oil output cuts, keeping supply tight.
Also, the price of the US West Texas Intermediate crude futures went down by $1.91 or 2.3 per cent to settle at $82.31 a barrel during the session.
Both crude futures have declined about $10 a barrel in less than 10 days after edging close to $100 in late September.
The combined percentage drop over the last two days was the steepest since May for both crude benchmarks.
Oil settled more than $5 lower on Wednesday, its biggest daily drop in over a year, even after a meeting of a ministerial panel of the Organisation of the Petroleum Exporting Countries and allies led by Russia, OPEC+.
It made no changes to the group’s oil output policy, and Saudi Arabia said it would maintain a voluntary cut of 1 million barrels per day until the end of 2023, while Russia would keep a 300,000 barrels per day voluntary export curb until the end of December.
Prices had risen about 30 per cent in the third quarter as OPEC+ production cuts squeezed global crude supply.
Now, investors are worried that peak demand for fuel consumption is behind and are now taking profits.
US government data on Wednesday showed a sharp decline in petrol demand. A drop in demand was at its lowest since the start of this year in the world’s largest economy and oil consumer.
The market will also be hoping that a Russian fuel export ban introduced last month will be lifted soon and supply disruptions will be less severe than markets had anticipated.
Data on Wednesday also showed the US services sector slowed while the eurozone economy probably shrank last quarter.
The US economy’s resilience, 18 months after the Federal Reserve started raising interest rates to cool demand, suggests that monetary policy could remain tight for some time.
Meanwhile, the US Dollar eased but continued to remain near 11-month highs, making crude more expensive for holders of other currencies.
On Thursday, the Turkish energy minister said a crude oil pipeline from Iraq through Turkey, which has been suspended for about six months, was ready for operations.
Turkey had halted flows on the pipeline, Iraq’s northern oil export route, after an arbitration ruling by the International Chamber of Commerce (ICC) ordered the country to pay Iraq damages for unauthorised exports between 2014 and 2018.
Turkey later started maintenance work on the pipeline that contributes about 0.5 per cent of global crude supply. The two countries agreed to wait until a maintenance assessment on the pipeline was complete to restart flows while still engaging in a legal battle on arbitration awards.
Dipo Olowookere