Oil retreats from 7-week high on supply-demand jitters

Crude prices slipped in Asian trading Thursday, pulling back from their strongest levels since early August as traders locked in profits and weighed mixed signals on supply and demand.

By 03:50 GMT, Brent crude fell 26 cents (0.4%) to $69.05 a barrel, while WTI dropped 27 cents (0.4%) to $64.72. Both benchmarks had surged 2.5% on Wednesday, boosted by a surprise U.S. inventory draw and fears that Ukrainian strikes on Russian energy assets could tighten supply.

Analysts suggested the rally may have peaked. “Oil looks to be hitting a ceiling, with softer seasonal demand and rising OPEC+ supplies into Q4,” said Priyanka Sachdeva of Phillip Nova. She added that the recent upswing appeared “more sentiment-driven than fundamental,” with Brent likely to consolidate near-term with a mild downside bias.

Profit-taking was evident Thursday as news of an imminent resumption of Kurdish oil exports revived oversupply concerns. Eight producers struck a deal with Iraq’s federal and regional governments on Wednesday to restart flows halted for months.

Still, Haitong Securities noted that oil prices have remained resilient, pointing to limited downward pressure from fundamentals despite the approach of the off-peak demand season.

Signs of softer consumption are emerging. J.P. Morgan reported U.S. airline passenger throughput in September rose just 0.2% year-on-year, down sharply from the 1% monthly gains seen earlier this summer. Gasoline demand has also eased, reflecting a broader moderation in travel trends.