Oil steady after tanking in previous session

05 Oct Oil steady after tanking in previous session

Oil prices were broadly steady on Thursday after the previous session’s big losses, as an uncertain demand outlook held off any boost from an OPEC+ panel maintaining oil output cuts to keep a tight supply.

Brent crude oil futures rose slightly by 18 cents to $85.99 a barrel at 0818 GMT, while U.S. West Texas Intermediate crude also crawled up 18 cents to $84.40.

Oil settled down more than $5 on Wednesday as a bleaker macroeconomic outlook and fuel demand destruction came into focus following a meeting of an OPEC+ panel, grouping the Organization of the Petroleum Exporting Countries and allies led by Russia.

The OPEC+ ministerial panel made no changes to the group’s oil output policy, and Saudi Arabia said it would continue with a voluntary cut of 1 million barrels per day (bpd) until the end of 2023, while Russia would keep a 300,000 bpd voluntary export curb until the end of December.

“We continue to see the market in deficit through the fourth quarter and the softer prices reduce the probability OPEC will ease supply constraints,” National Australia Bank analysts said in a note.

On the downside, the euro zone economy probably shrank last quarter, according to a survey which showed demand fell in September at the fastest pace in almost three years as consumers reined in spending amid rising borrowing costs and prices.

The latest data also showed a sharp decline in U.S. gasoline demand. Finished motor gasoline supplied, a proxy for demand, fell last week to about 8 million bpd, its lowest since the start of this year, the U.S. Energy Information Administration (EIA) reported on Wednesday.

Oil prices will struggle to push higher given the more uncertain demand outlook, along with weaker U.S. economic data released on Wednesday and a significant build in gasoline inventories, he added.

The U.S. services sector slowed in September as new orders fell to a nine-month low, though the pace remained consistent with expectations for solid economic growth in the third quarter.