Oil prices extended losses on Thursday after closing at a three-month low on Wednesday, on signs the U.S. Federal Reserve may keep interest rates high for longer, which could weigh on energy demand.
Brent crude fell for a fourth straight session, heading towards $81 a barrel, while West Texas Intermediate crude fell near $77 a barrel.
Minutes from the US Federal Reserve meeting earlier this month showed a hawkish tone from officials, adding another negative factor to an oil market that is showing signs of weakness ahead of the OPEC+ meeting.
Oil is still up slightly this year, due to supply cuts by the alliance, although prices have fallen since mid-April. U.S. crude inventories rose last week, government data showed, with stockpiles at the Cushing, Oklahoma, storage hub rising to their highest since July.
“Oil is generally in a downtrend. The biggest focus is still on whether the voluntary production cuts will be extended at the OPEC+ meeting,” said Gao Mingyu, senior energy analyst at Beijing-based SDIC Essence Futures Co.
The alliance is scheduled to meet on June 1, and the group is widely expected to extend existing output cuts. Russia, a member of the alliance, exceeded its production commitment in April and pledged to compensate for the extra supply, the Russian Energy Ministry said on Monday.
Some market indicators are starting to point to potential weakness. The spread between the two nearest-term Brent crude contracts is approaching contango, a bearish pattern that could signal oversupply. Money managers have also scaled back their bets on higher prices.
