Oil steadied after a two-day drop as nervousness over a potential Iranian attack on Israel outweighed downbeat China data showing a decline in crude consumption.
Brent traded near $80 a barrel after falling by 3.1% over the previous two sessions, with West Texas Intermediate above $77. Two weeks after Iran vowed to retaliate for the killing of a senior Hamas leader on its soil, tension is building over what form the attack might take.
In China, apparent oil demand fell 8% from a year ago in July, government data showed Thursday, exacerbating the downbeat mood in Asia’s biggest economy.
Crude has fallen from a recent peak in early July, weighed down by a poor outlook for consumption in China, with gasoline demand in the Asian nation being damped by growing use of cleaner fuels. OPEC lowered its global demand forecast for 2024 in its monthly report issued earlier this week, while International Energy Agency data showed the market would be in surplus next quarter if the cartel went ahead with a plan to restore supply.
“Current market fundamentals suggest that OPEC+ is unlikely to increase production in the fourth quarter,” said Ole Hvalbye, a commodities analyst at SEB AB. “As we exit the Northern Hemisphere peak demand period, and assuming crude and product inventories stabilize according to seasonal patterns, a potential production increase from OPEC+ in October could lead to an oversupply.”
Meanwhile, US crude inventories unexpectedly rose by 1.36 million barrels last week, the first gain in seven weeks, official data showed on Wednesday. The build was notable given a report from the American Petroleum Institute a day earlier that pointed to a sizable drop. Stockpiles remain below seasonal averages, but the data may increase concern about flagging demand.
