Crude oil prices fall to $69.05 after hitting seven-week high on supply concerns

Oil prices slipped on Thursday as investors took profits following a rally to a seven-week high in the previous session, driven by an unexpected decline in U.S. crude inventories and worries that Ukrainian strikes on Russian energy facilities might threaten supply.

As of 3:57 GMT, Brent crude futures dipped 26 cents or 0.38 percent to $69.05 a barrel, while U.S. West Texas Intermediate crude futures fell 27 cents or 0.42 percent to $64.72. Both benchmarks gained 2.5 percent on Wednesday, reaching their highest levels since August 1.

Oil exports from Iraqi Kurdistan to resume soon

Oil exports from Iraqi Kurdistan are expected to resume within days after eight energy companies reached an agreement on Wednesday with Iraq’s federal government and the Kurdish regional authorities. The deal paves the way for restarting flows of roughly 230,000 barrels per day, which have been halted since March 2023.

The Energy Information Administration reported on Wednesday that U.S. crude inventories dropped by an unexpected 607,000 barrels in the week ending September 19, compared to a fall of 9.285 million barrels in the previous week. The drop contrasted with projections of a 235,000-barrel increase, though it was smaller than the 3.8 million-barrel draw estimated by the American Petroleum Institute on Tuesday.

Russia-Ukraine war raises supply risks

Oil prices also found support from supply risks linked to the war in Ukraine. In recent weeks, Ukraine has intensified drone strikes on Russian energy facilities, including refineries and export hubs, in an effort to curb Moscow’s export revenues.

The attacks have contributed to shortages of certain fuel grades in Russia, raising the possibility of export restrictions if required. Russia was the second-biggest producer of crude in 2024 behind the U.S. and is a member of OPEC+, which includes OPEC and allies.

U.S. President Donald Trump said he believed Ukraine is capable of reclaiming all territory seized by Russia, signaling a sharp shift in tone in support of Kyiv. Earlier this month, his administration also pressed European Union member states to accelerate efforts to phase out Russian oil and gas.

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Global oil demand growth falls short of expectations

Despite recent supply concerns, a major factor underpinning oil’s resilience has been the absence of strong downward pressure from supply–demand fundamentals in recent weeks. While the peak demand season is winding down, anticipated oversupply pressures have not yet weighed on oil prices.

Separately, a J.P. Morgan report released on Wednesday showed that global oil demand growth from the start of the year through September 23 averaged 800,000 barrels per day, slightly below the bank’s 830,000 bpd forecast. The report added that month-to-date demand has averaged 104.4 million bpd, consistent with its September projection.