Crude steadies after previous session’s slump

Oil prices were broadly steady on Thursday after the previous session’s big losses, as an uncertain demand outlook held off any boost from an Opec+ panel maintaining oil output cuts to keep a tight supply.

Brent crude oil futures rose 18c to $85.99 a barrel at 8.18am GMT, while West Texas Intermediate crude also added 18c to $84.40.

Oil settled more than $5 lower on Wednesday as a bleaker macroeconomic outlook and fuel demand destruction came into focus after a meeting of an Opec+ panel, comprising the Opec and allies led by Russia.

The ministerial panel made no changes to the group’s oil output policy, and Saudi Arabia said it would continue with a voluntary cut of 1-million barrels a day until the end of 2023, while Russia will maintain a 300,000 bbl/day voluntary export curb until the end of December.

“We continue to see the market in deficit through the fourth quarter and the softer prices reduce the probability Opec will ease supply constraints,” National Australia Bank analysts said in a note.

On the downside, the eurozone economy probably shrank last quarter, according to a survey which shows demand in September fell at the fastest pace in almost three years as consumers reined in spending as result of rising borrowing costs and prices.

The latest data also shows a sharp decline in US petrol demand. Finished petrol supplied, a proxy for demand, fell to about 8-million bbl/day last week, the lowest since the start of this year, the US Energy Information Administration reported on Wednesday.

“The three-month rally in crude oil prices has been riding on the narrative of tighter supply dynamics and resilient global economic conditions, so there is some discomfort for the bulls lately when the tailwinds were not as prominent as before,” said Yeap Jun Rong, a market strategist at IG.

Oil prices will struggle to push higher given the more uncertain demand outlook, along with weaker US economic data released on Wednesday and a significant build in petrol inventories, he added.

The US services sector slowed in September as new orders fell to a nine-month low, though the pace remained consistent with expectations for solid economic growth in the third quarter.

Reuters