• Oil prices extended their losing streak to a fifth day on weak demand expectations and speculation about a reversal of OPEC+ production cuts.
• The main reasons for demand concerns are the economic slowdown in China and weak oil import data.
• Geopolitical risks in the Middle East and possible weather-related disruptions are partly supporting oil prices.

Crude oil prices’ losing streak extended into its fifth day today as expectations of weak demand weighed on benchmarks.

Brent oil fell below 76 dollars per barrel and West Texas Middle School was below $72 earlier in the day, even though the EIA reported inventory declines in the crude oil and fuel sectors in its Wednesday report.

There was another reason for the price drop: the apparent belief among oil traders that OPEC would reverse some of its production cuts despite falling prices. OPEC has made it very clear that it will only reverse its production cuts if prices are right.

“The downward pressure on prices makes it increasingly likely that OPEC+ will have to abandon its plans to gradually increase production from October. If this does not succeed, price pressure is likely to increase further,” ING analysts said in a statement.

“Weak global demand and the potential threat from OPEC+ to reverse its production cuts are weighing on oil prices,” said Phillip Nova analyst Priyanka Sachdeva told ^ “Reuters”.

In a report published today, Bloomberg noticed that the oil sell-off triggered by the recent wave of fears about oil demand has been exacerbated by automated trading, which follows technical trends in its trading decisions.

It also quoted Citi analysts struck a modestly optimistic tone, saying that “the possibility of weather-related disruptions during hurricane season, as well as geopolitical risks in North Africa and the Middle East, could provide a buying opportunity at around $75 a barrel for a recovery to $80.”

Demand concerns continue to focus exclusively on China, where various economic indicators as well as data on oil imports and fuel exports point to a slowdown in demand growth for the world’s most traded commodity.

On the other hand, geopolitical price premiums remain in place to counteract demand pessimism, as the chances of an actual ceasefire between Israel and Hamas remain slim.

By Irina Slav for Oilprice.com

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