By Ramy Zeytouni, Market Analyst at Ramy Zeytouni LLC
Oil prices declined on Thursday, deepening a 2.5% loss from the previous session amid mounting speculation that OPEC+ will increase production. The producer alliance is scheduled to meet this weekend to review its output policy. Reports suggest that the group may continue to reverse its voluntary cuts in an effort to reclaim market share. This uncertainty has prompted traders to de-risk their positions pending the meeting’s outcome, as the prospect of increased supply weighs on the market.
Bearish sentiment was compounded by a surprise build in US crude inventories, which increased by 0.6 million barrels last week against forecasts of a 3.4 million-barrel draw. This suggests potentially lower demand, and market participants now await the official Energy Information Administration (EIA) report for confirmation. Another inventory build would likely reinforce the bearish case, whereas a significant draw could offer price support.
Concerns over the demand outlook were further intensified by signs of a cooling U.S. economy, exemplified by a recent JOLTS report that revealed a slowdown in job openings.