Oil prices fell by more than USD 2 per barrel on Thursday. This development was mainly due to fears of a wider conflict in the Middle East, which unexpectedly eased at a time when US demand showed signs of weakening for oil. On Thursday, Brent crude settled at USD 87.93 per barrel, down USD 2.20, or 2.44%. On Wednesday, US heavy Brent crude settled almost 2% higher. Oil prices have recently been boosted by concerns over the conflict between Israel and the Palestinian (militant) group Hamas, which could drag Iran and its allies in the region into a war. Concerns about the wider global economy have also weighed on current oil prices, with US Treasury yields, for example, heading back towards 5% on Thursday. This dragged stocks around the world to multi-month lows.
However, the United States saw its economy grow at its fastest pace in nearly two years in the third quarter of this year, raising expectations that the Federal Reserve will keep interest rates high for longer. Rising US crude oil inventories over the past week have indicated weaker demand. Inventories rose 1.4 million barrels to 421.1 million barrels, according to the Energy Information Administration (EIA), exceeding the 240,000-barrel gain expected by analysts in a Reuters poll. The data follows a surprise drop in business activity in the eurozone this month.
The European Central Bank left interest rates unchanged on Thursday, breaking an unprecedented streak of 10 consecutive rate hikes and maintaining its guidance that implies a stable policy. OPEC+, led by Saudi Arabia and Russia, among others, cut output by 1.3 million barrels per day (bpd) earlier this year and extended the reduced level of output until the end of this year in September. The next meeting of OPEC members is scheduled for late November.