Economy
Seasonal Demand Decline Signals Pull Down Oil Prices
By Adedapo Adesanya
Oil prices dipped on Tuesday as traders awaited an inventory report from the US Energy Information Administration (EIA) and began looking toward declining demand at the end of the summer driving season in early September.
Brent crude traded at $66.12 a barrel after it lost 51 cents or 0.77 per cent and the US West Texas Intermediate (WTI) crude finished at $63.17 per barrel after it weakened by 79 cents or 1.24 per cent.
The American Petroleum Institute (API) estimated that crude oil inventories in the US rose by 1.5 million barrels in the week ending August 8. So far this year, crude oil inventories are up more than 10 million barrels.
This suggests that the peak summer driving season is winding down. Gasoline inventories fell, but distillates, used for diesel and heating oil, saw a slight build.
The market will, however, await official data from the EIA to full grasp if demand was weakening as the API data signals.
Market analysts noted that if the EIA’s official figures confirm a crude build, it would reinforce expectations that refiners are dialing back runs as the Memorial Day-to-Labor Day demand window closes.
Meanwhile, new outlooks issued by Organisation of the Petroleum Exporting Countries (OPEC) and the EIA pointed to increased production this year, but both expect US output to decline in 2026 while other regions of the globe will increase oil and natural gas production.
OPEC’s monthly report on Tuesday said global oil demand will rise by 1.38 million barrels per day in 2026, up 100,000 from the previous forecast. Its 2025 projection was left unchanged.
The EIA forecast on Tuesday in a monthly report that US crude production will hit a record 13.41 million barrels per day in 2025 due to increases in well productivity, though lower oil prices will prompt a fall in output in 2026.
Also, US consumer prices increased in July as tariff-induced rising costs for imported goods helped to drive the strongest gain in six months for one measure of underlying inflation.
US President Donald Trump extended a tariff truce with China to November 10, while he and Russian President Vladimir Putin are due to meet in Alaska on Friday to discuss ending Russia’s war in Ukraine.
