Oil prices dip as oversupply, weak US demand weigh against geopolitical risks

Oil prices edged lower Thursday as concerns about weakening U.S. demand and rising global supply offset geopolitical tensions in the Middle East and Ukraine.

Brent crude slipped 13 cents, or 0.2%, to $67.36 a barrel by 0729 GMT, while U.S. West Texas Intermediate (WTI) fell 17 cents, or 0.3%, to $63.50.

Both benchmarks had climbed more than $1 on Wednesday after Israel targeted Hamas leadership in Qatar and NATO forces in Poland intercepted suspected Russian drones that crossed from Ukraine. The rebound followed a steady recovery from a three-month low hit on September 5.

Still, analysts said oversupply remained the dominant market driver. “While geopolitical conflicts provide some support, the market is more concerned with oversupply,” wrote Tamas Varga of PVM Oil Associates, noting that talk of tighter sanctions on Russian crude buyers such as China and India has yet to materialize.

Data from the U.S. Energy Information Administration showed crude inventories rose by 3.9 million barrels in the week to September 5, defying expectations of a 1-million-barrel draw. A softer U.S. economy has also pressured demand, with traders eyeing Thursday’s inflation report for clues on the Federal Reserve’s next rate decision.

“Markets are cautious ahead of CPI data, with significant Fed rate cuts already priced in — a hotter print could unsettle that view,” said Tony Sycamore, analyst at IG.

On the supply side, OPEC+ confirmed it would raise output from October, though at a slower pace than in previous months. Even so, the EIA warned that higher production could drive inventory builds and push prices lower in the months ahead.