Crude oil prices were set to record their sharpest weekly decline since March, pressured by demand concerns despite OPEC+’s decision to continue constraining supply.
Since the start of the week, Brent crude has shed close to 12% and West Texas Intermediate has declined by almost 9%. The crash, which seemed to be sparked by the EIA’s report of weak U.S. gasoline demand, led to a rapid change in market sentiment.
The decline was also tied to a bond market selloff that sparked worry about the prospects of the global economy and, by extension, oil demand.
"Oil prices are stabilizing after a brutal week that saw a relentless bond market selloff trigger global growth worries," Reuters quoted OANDA senior analyst Edward Moya as saying.
Meanwhile, inflation in the United States has continued to take its toll on consumer spending, including on fuels, Bloomberg noted in its latest report on prices.
“The decline in gasoline demand is unsurprising as inflation’s erosion on household budgets comes home to roost,” Mizuho Bank analyst Vishnu Varathan told the news outlet in comments on the latest gasoline consumption data out of the U.S., which showed a marked weakening.
The EIA reported on Wednesday that gasoline inventories had added 6.5 million barrels in the last week of September, which was the largest inventory build since January 2022, ING said in a note, which also highlighted the fact this was the weakest week for gasoline demand in the U.S. since the early 2000s.
More sharp swings in oil prices are possible later today after the Bureau of Labor Statistics releases the jobs report for September. If the labor market remains tight, it would fuel expectations of more rate hikes, which would weigh further on crude oil.
Next week, all eyes will be on the latest inflation data from the U.S. and economic updates from China.
With the latest OPEC+ meeting now behind us, economic concerns have undoubtedly become the primary concern of traders, even as the market remains tight.
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By Irina Slav for Oilprice.com
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