Brent crude futures for October dropped 46 cents, or 0.6 percent, to $77.20 per barrel. Similarly, U.S. West Texas Intermediate (WTI) crude for September delivery decreased by 33 cents, or 0.4 percent, to $74.04. The more actively traded October WTI futures, soon to become the front-month, fell 49 cents to $73.17 per barrel.
U.S. Secretary of State Antony Blinken visited Egypt, pushing for progress on a Gaza ceasefire and hostage release deal, though significant differences remain. Bob Yawger of Mizuho noted that before these negotiations, a geopolitical risk premium of $4 to $8 was built into oil prices.
Israel retrieved the bodies of six hostages from Gaza, with efforts ongoing to release over 100 remaining captives. Despite ceasefire talks, clashes between Israel and Hamas continue, making markets highly sensitive to regional developments, according to Rystad Energy's Svetlana Tretyakova.
If the bearish trend in oil prices persists, OPEC+ may hesitate to roll back voluntary production cuts. The group, which includes OPEC and allies like Russia, emphasized that global oil demand growth must accelerate in the coming months to absorb their planned supply increase starting in October. Saudi Arabia, the largest OPEC producer, reported a decline in crude exports to 6.047 million barrels per day in June from 6.118 million bpd in May.
China's economic slowdown, marked by the steepest drop in new home prices in nine years, slower industrial output, and rising unemployment, further pressured oil prices. U.S. heating oil futures reached their lowest levels since May 2023 for the second day, with refining profit margins near their weakest since November 2021. U.S. gasoline futures also fell to their lowest since February 2024.
In response to these challenges, several refinery companies, including PBF Energy, Phillips 66, and Marathon, have announced cuts to their capacity rates, according to analysts at Gelber and Associates.
The American Petroleum Institute (API) and the U.S. Energy Information Administration (EIA) are set to release their weekly U.S. oil storage data. Analysts predict that U.S. energy firms withdrew around 2.7 million barrels of crude from storage during the week ending Aug. 16.
If correct, this would be the seventh decline in U.S. crude inventories in the past eight weeks, following a 6.1 million-barrel draw in the same week last year and an average decrease of 3.4 million barrels over the past five years.
