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Crude oil benchmarks failed to hold intraday gains to finish flat Thursday, maintaining their lowest levels this year, as worries about demand in the U.S. and China and an anticipated boost in supplies out of Libya offset an unexpectedly large withdrawal from U.S. crude inventories and news of a two-month delay by OPEC+ in starting to unwind production cuts.
OPEC+ said it will extend additional voluntary cuts until the beginning of December instead of starting to pare them back in October, which should stabilize prices around the low $70s, Peter Cardillo of Spartan Capital said, according to Dow Jones.
The decision delays the planned increase in oil production announced earlier this year, which would have seen a hike of 180K bbl/day starting in October.
Mizuho’s Robert Yawger was not impressed with the move, saying the “gasoline market would be capable of cratering crude oil even if the OPEC+ chaos was not leaning on [the] price. If you don’t need the gasoline, you don’t need the crude oil to make gasoline.”
Meanwhile, the U.S. Energy Information Administration reported a larger than forecast 6.9M-barrel reduction in U.S. crude inventories for last week, largely the result of lower imports, while gasoline stocks rose by 800K barrels as demand declined.
Front-month Nymex crude (CL1:COM) for October delivery settled -0.1% to $69.15/bbl, its lowest close since December for the third day in a row, and front-month November Brent (CO1:COM) fell one cent to $72.69/bbl, its weakest settlement since June 2023 for the second straight day.
Gasoline futures slid to their lowest close since March 25, 2021, as front-month Nymex October RBOB gasoline (XB1:COM) ended -1.8% to $1.9258/gal.
Also, front-month Nymex October natural gas (NG1:COM) rose to its highest in nearly two months, +5.1% to $2.254/MMBtu, after the EIA reported a smaller than expected 13B cf increase in inventories for last week.
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The behavior of oil prices reflects data from U.S. purchasing managers that remains on the contractionary side and labor market reports that “warn of a global recession,” NinjaTrader analyst Tom Schneider told MarketWatch.
“Recessionary worries, supported by weakening manufacturing and labor market numbers, outweigh the intentions of the OPEC+ members,” Schneider said.
