Oil prices struggled to find their footing in Asian trade on Thursday after easing in the previous session on the back of a weakening global demand outlook.
Brent crude futures dropped 7 cents, or 0.1 percent, to $92.38 a barrel. US West Texas Intermediate crudewas down 21 cents at $87.06 a barrel, or 0.2 percent.
Both OPEC and the US Energy Department have cut their demand outlooks, while a flare-up in COVID-19 cases in China has sparked fresh demand concerns for the world’s top crude importing-country.
“This week has placed growth risks back into the spotlight for oil prices, as the initial enthusiasm over OPEC+ production cuts has proved to be short-lived and gains are seen fading off,” said Jun Rong Yeap, market strategist at IG.
“While the OPEC+ production cuts may provide somewhat of a floor for oil prices, upside may seem limited as economic conditions will run the risks of further moderation as a trade-off to further Fed’s tightening process,” Yeap added.
Last week, the producer group comprising the Organization of the Petroleum Exporting Countries (OPEC) and allies including Russia pushed prices higher when it agreed to cut supply by 2 million barrels per day (bpd).
But OPEC on Wednesday cut its outlook for demand growth this year by between 460,000 bpd and 2.64 million bpd, citing the resurgence of China’s COVID-19 containment measures and high inflation.
“Growing demand fears and intensifying supply issues are likely to keep commodity prices volatile,” said ANZ Research analysts. – Reuters
