By Myra P. Saefong and William Watts
Oil futures finished lower Thursday, with pressure from worries about the outlook for energy demand partially offset by prospects for a production cut next week by the Organization of the Petroleum Exporting Countries and its allies.
West Texas Intermediate crude for November delivery /zigman2/quotes/211629951/delayed CL.1 +0.45% /zigman2/quotes/209723049/delayed CL00 +0.45% fell 92 cents, or 1.1%, to settle at $81.23 a barrel on the New York Mercantile Exchange following a gain of nearly 4.7% on Wednesday.
December Brent crude , the most actively traded contract for the global benchmark, was down 87 cents, or 1%, at $ $87.18 a barrel on ICE Futures Europe. November Brent , the front-month contract which will expire at the end of Friday’s session, declined by 83 cents, or 0.9%, at $88.49 a barrel.
Back on Nymex, October gasoline fell 2.7% to $2.5076 a gallon, while October heating oil lost 1% to $3.4146 a gallon. Both October contracts expire Friday.
November natural gas fell 1.2% to $6.874 per million British thermal units.
Oil prices were holding onto a gain for the week, bouncing off eight-month lows. A rally by the dollar relented, after taking the U.S. Dollar Index /zigman2/quotes/210598269/delayed DXY -0.21% to a 20-year high, while traders turned their attention to the prospect of a production cut by OPEC+, which is comprised of the Organization of the Petroleum Exporting Countries and their allies.
But analysts said the tone for crude remains weak, with worries that aggressive monetary tightening by the Federal Reserve and other major central banks will sink the global economy, outweighing worries over the Russia-Ukraine war and other supply concerns.
“The lack of a disruption risk premium makes it clear: The market fears Fed Chair Powell more than it fears escalatory conduct from [Russian President] Vladimir Putin or OPEC’s ability to defend the market,” said Michael Tran, commodity analyst at RBC Capital Markets, in a note.
A statement from the North Atlantic Treaty Organization said all “currently available information” points to the damage to the Nord Stream 1 and 2 pipelines that has resulted in a series of leaks was the result of “deliberate, reckless, and irresponsible acts of sabotage.” NATO did not identify a perpetrator.
Meanwhile, OPEC+ members have discussed a potential production cut ahead of a meeting next week, Reuters reported . The report said Russia could suggest a cut of up to one million barrels a day.
Tran, however, said OPEC+ faces a dilemma after Saudi Arabia previously complained of a disconnect between a soft futures market and a tight physical market.
“The group symbolically cut 100,000 barrels a day earlier this month. Larger cuts over the near term would signal a concession that physical demand is worse than initially assessed. Cut too little and the market shrugs it off,” Tran said. “That is the Catch-22 .”
Crude also found some support from Hurricane Ian, which made landfall in Florida Wednesday as a violent Category 4 storm . The Bureau of Safety and Environmental Enforcement had estimated Wednesday afternoon that approximately 9.12% of the current oil production and 5.95% of the natural gas production in the Gulf of Mexico had been shut in.