Global oil prices dip from multi-month highs amid profit-taking

WEB DESK: Global oil prices declined on Thursday as traders took profits following recent gains, while caution over demand persisted despite last week’s significant drop in US inventories.

Brent crude fell by 0.60 per cent, trading near $86.82 per barrel. Similarly, West Texas Intermediate (WTI) crude was down by 0.68 per cent, settling at $83.31 per barrel. The market saw thinner trading volumes due to the US Independence Day holiday.

In the prior session, Brent had climbed 1.3 per cent to $87.34, its highest level since April 30, and WTI had reached an 11-week high of $83.88. These gains were driven by a larger-than-expected draw in US crude stocks.

The US Energy Information Administration (EIA) reported a 12.2 million barrel decline in inventories, significantly exceeding analysts’ expectations of a 680,000 barrel reduction.

Despite the recent decline, PVM analyst Tamas Varga suggested that the price weakness might be temporary, citing dollar weakness and a more optimistic outlook for US fuel demand based on the EIA data.

OANDA analyst Kelvin Wong noted that the drop in prices on Thursday morning was partly due to traders taking profits after the recent surge.

Adding to the market’s concerns, Germany reported an unexpected fall in industrial orders in May, highlighting ongoing economic challenges for Europe’s largest economy. Additionally, US data indicated a rise in first-time unemployment benefit applications, further raising demand concerns.

However, analysts pointed out that weaker economic data could prompt the US Federal Reserve to cut interest rates sooner, potentially supporting oil markets. Market expectations for a September rate cut have risen to 74 per cent from 65 per cent.

Swiss bank UBS remains optimistic about oil prices, forecasting Brent crude to reach $90 per barrel this quarter. This projection is based on expected OPEC+ production cuts and anticipated declines in oil inventories.