LONDON: Oil prices fell by more than $1 on Thursday, extending the sharp losses from the previous session as an uncertain demand outlook overshadowed any boost from an OPEC+ panel maintaining oil output cuts to keep supply tight. Brent crude oil futures dropped $1.19 to $84.62 a barrel by 10:45 AM GMT, while U.S. West Texas Intermediate crude was $1.31 lower at $82.91.
Oil settled more than $5 lower on Wednesday - marking its biggest daily drop in over a year - as a bleaker macroeconomic outlook and fuel demand destruction came into focus following a meeting of an OPEC+ panel, comprising the Organization of the Petroleum Exporting Countries and allies led by Russia.
The OPEC+ ministerial panel made no changes to the group's oil output policy, and Saudi Arabia stated it would continue with a voluntary cut of 1 million barrels per day (bpd) until the end of 2023, while Russia would maintain a 300,000 bpd voluntary export curb until the end of December.
The Kremlin also announced on Thursday that there was no deadline for lifting its ban on fuel exports to combat high local gasoline and diesel prices.
"We continue to see the market in deficit through the fourth quarter, and the softer prices reduce the probability that OPEC will ease supply constraints," noted analysts at National Australia Bank in a statement.
On the downside, the euro zone economy likely shrank in the last quarter, according to a survey that showed demand fell in September at the fastest pace in almost three years as consumers reined in spending amid rising borrowing costs and prices.
The latest data also indicated a sharp decline in U.S. gasoline demand. Finished motor gasoline supplied, a proxy for demand, fell last week to about 8 million bpd, its lowest level since the start of this year, as reported by the U.S. Energy Information Administration (EIA) on Wednesday.
"The three-month rally in crude oil prices has been based 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.
Given the more uncertain demand outlook, along with weaker U.S. economic data released on Wednesday and a significant build in gasoline inventories, oil prices will struggle to push higher, he added.
The U.S. 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.
Meanwhile, a crude oil pipeline from Iraq through Turkey, which has been suspended for about six months, is now ready for operations, according to the Turkish energy minister.
Reporting by Paul Carsten in London, Katya Golubkova in Tokyo, and Jeslyn Lerh in Singapore; Editing by Alison Williams and Kirsten Donovan.
Your text looks great, and these changes mainly aim to enhance readability and ensure consistent formatting. _Reuters
Oman Observer is now on the WhatsApp channel. Click here
