Oil prices have tumbled in the past two weeks on recession concerns despite a drop in crude and refined products exports from Russia amid Western sanctions and supply disruption in Libya.
"Clearly, focus is now on the demand side of the oil equation. Yesterday's weekly EIA (U.S. Energy Information Administration) report showed sizeable builds in product inventories," Tamas Varga, analyst at PVM Oil Associates, said.
Brent crude futures for September were down $1.86 cents to $97.71 a barrel at 1016 GMT Thursday after settling below $100 for a second straight session on Wednesday.
U.S. West Texas Intermediate crude for August delivery was at $94.01 a barrel, down $2.29 cents.
Oil prices have tumbled in the past two weeks on recession concerns despite a drop in crude and refined products exports from Russia amid Western sanctions and supply disruption in Libya.
Data from the U.S. Energy Information Administration also point to slackening demand, with product supplied slumping to 18.7 million barrels per day, the lowest since June 2021. Crude inventories rose, bolstered by another big release from strategic reserves.
"Clearly, focus is now on the demand side of the oil equation. Yesterday's weekly EIA (U.S. Energy Information Administration) report showed sizeable builds in product inventories," Tamas Varga, analyst at PVM Oil Associates, said.
"Collateral damage of growing fears of inflation is the strong dollar, which is also bearish for oil prices. Interestingly, physical markets are still strong but the change in sentiment of financial investors is currently the dominant driving force," Varga added.
The U.S. Federal Reserve is seen ramping up its battle with 40-year high inflation with a supersized 100 basis points rate hike this month after a grim inflation report showed price pressures accelerating.
U.S. President Joe Biden will on Friday fly to Saudi Arabia, where he will attend a summit of Gulf allies and call for them to pump more oil.
However, spare capacity at the Organization of the Petroleum Exporting Countries is running low, with most of the producers pumping at maximum capacity, and it is unclear how much extra Saudi Arabia can bring into the market quickly.