Oil closes lower amid demand concerns

Oil drilling rigs

Oil prices closed lower today, Sept. 13, amid renewed concerns about the impact of tightening monetary policy on demand. The prices had earlier shot up to near 10-month high levels on expectations of a decline in supply.

Data in the US showed that the consumer price index rose by 3.7% in August on an annual basis, after reaching 3.2% in July. The August reading was higher than expectations of 3.6%. Compared to the previous month, prices rose by 0.6%, the largest increase since June 2022.

“The latest US inflation reading has raised concerns that the central bank could stifle growth and send the economy into recession, a scenario that is never good for oil demand,” said Tyler Ritchie, Co-Editor of Sevens Report Research.

Data from the US Energy Information Administration revealed that oil inventories rose by 4 million barrels during the week ended Sept. 8, contrary to expectations of a decline of 1.9 million barrels, which increased fears of weak demand.

The International Energy Agency said OPEC+ extension of production cuts until the end of the year will lead to a large supply deficit. The global demand for oil is on track to grow by 2.2 million barrels per day this year to 101.8 million barrels per day, driven by consumption in China, it added.

Russian Energy Minister Nikolai Shulginov said in an interview with the local newspaper Izvestia that the country's oil production may decline by 1.5% to 527 million metric tons (10.54 million barrels per day) during the current year, compared to about 535 million metric tons per day in 2022.

Brent crude futures for November delivery fell 0.2%, or 18 cents, to close at $91.88 per barrel, after rising to $92.84 during the session.

WTI crude for October delivery declined 0.35%, or 32 cents, to record $88.52 per barrel, after touching $89.64 during trading.