Oil Prices Drift Lower in Asian Trade

Oil prices drifted lower in Asian trade on Thursday, influenced by lukewarm industry data on U.S. inventories while markets awaited insights on demand from China and the International Energy Agency (IEA).

Prices had shown a slight uptick on Wednesday but were still down for the week after OPEC reduced its demand forecast for the fourth consecutive month. China’s fiscal measures to stimulate the economy did not meet expectations either.

Brent oil futures expiring in January fell 0.1% to $72.23 a barrel, while West Texas Intermediate crude futures dropped 0.1% to $68.17 a barrel by 20:21 ET (01:21 GMT).

U.S. Oil Inventories and Product Stocks

According to data from the American Petroleum Institute (API) released on Wednesday, U.S. oil inventories declined by approximately 777,000 barrels in the week ending November 8, contrary to expectations for an increase of 1 million barrels and compared to a build of 3.1 million barrels the previous week.

However, gasoline stockpiles rose by 312,000 barrels, and distillate inventories increased by 1.1 million barrels, sparking concerns over a potential cool down in U.S. fuel demand as winter approaches.

Typically, API data anticipates similar findings from official inventory reports, set to be released later on Thursday; the data's release was delayed by a U.S. holiday on Monday.

Oil prices faced pressure due to diminishing fears of U.S. supply interruptions, especially as tropical storm Rafael dissipated without causing significant Gulf of Mexico disruption.

Moreover, uncertainty surrounding a possible second Donald Trump presidency added to the market volatility since he plans to enhance U.S. oil production and impose trade tariffs on China, a major oil importer. Following Trump's election win, the dollar soared to a one-year high, influencing crude prices negatively.

IEA Demand Outlook and China's Stimulus

Market attention is now fixed on the upcoming monthly report from the IEA, expected later today. This report follows OPEC's recent cut in its 2024 demand growth forecast, citing ongoing worries about slackening demand from China.

The IEA has been consistently lowering its demand forecast this year and presents a more pessimistic view on demand growth compared to OPEC. Recent Chinese economic struggles have put them at the forefront of oil market discussions as their attempts at stimulus have failed to impress. A Trump presidency is anticipated to introduce additional economic strains on China.