HG MARKETS:

Oil prices declined for the fifth consecutive session on Thursday, as concerns over global demand persisted. However, a decrease in U.S. fuel inventories helped limit the losses. Brent crude futures dipped by 2 cents, settling at $76 per barrel, while U.S. West Texas Intermediate crude futures fell 13 cents to $71.80 per barrel. The downward trend in prices follows a report released on Wednesday revising U.S. employment statistics, which indicated that fewer jobs were created in 2024 than previously estimated. Additionally, last week’s weak economic data from China, the world’s second-largest economy and largest oil importer, further weighed on market sentiment. The potential weakness in the U.S. economy, combined with a sluggish recovery in China, suggests that oil demand growth may fall toward the lower end of expectations.Investors are also anticipating that the Organization of the Petroleum Exporting Countries (OPEC) and its allies, collectively known as OPEC+, may lift some of the voluntary production cuts in October, which could add more supply to the market.

Concerns about how OPEC+ production levels will unfold in the fourth quarter, particularly if these cuts are reversed, have added to the downward pressure on prices. However, there is a possibility that OPEC+ could pause or reverse these plans if necessary. The continued decline in crude prices makes it increasingly likely that OPEC+ may need to reconsider their plans to gradually increase supply from October. Failure to do so could further depress prices. Despite the price decline, a U.S. government report on Wednesday showed that U.S. crude, gasoline, and distillate inventories fell in the week ending August 16, while refinery activity increased.

Meanwhile, concerns over the Israel-Gaza conflict have eased in the past week, as efforts by the U.S., Israel, and Hamas to negotiate a ceasefire continue, although recent U.S. diplomatic efforts did not result in a truce. Market participants are now turning their attention to the upcoming policy symposium in Jackson Hole, Wyoming, where Federal Reserve Chair Jerome Powell is scheduled to speak on Friday, potentially providing more insight into the economic outlook.