LONDON: Oil prices were largely steady on Thursday, with traders holding fire after declines earlier this week on a stronger US dollar and worries about rising supply amid slow demand growth.
Brent crude futures edged 17 cents higher to $72.45 a barrel at 1203 GMT. US West Texas Intermediate crude futures were up 14 cents to $68.57.
“The primary driver of oil prices, both in the near term and looking ahead, will be the direction of the US dollar,” said Phillip Nova investment analyst Danish Lim.
The dollar’s recent rally has been a key downside pressure, said Lim, who expects oil markets to stay volatile, with a bearish bias.
The dollar surged to a one-year high on Thursday, extending gains from Wednesday’s seven-month high against major currencies after data showed US inflation in October increased in line with expectations. This, in turn, stoked worries of slowing demand in the United States.
The market is “a concoction of weak demand factors”, with the latest worry being a rally in US 10-year Treasury yields and a surge in the 10-year breakeven inflation rate to 2.35%, said OANDA senior market analyst Kelvin Wong.
“(This) increases the odds of a shallow Fed interest rate cut cycle heading into 2025 (and) overall, there is less liquidity to stoke an increase in demand for oil,” he added.
The International Energy Agency (IEA) said on Thursday global oil supply will exceed demand in 2025 even if cuts remain in place from OPEC+, which groups the Organization of the Petroleum Exporting Countries and allies like Russia, as rising production from the United States and other outside producers outpaces sluggish demand.
The Paris-based agency raised its 2024 demand growth forecast by 60,000 bpd, and left its 2025 oil demand growth forecast little changed at 990,000 bpd.
With slowing demand in China, there are few supply-demand factors supporting bullish oil markets, said independent market analyst Tina Teng.
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