Oil prices fell for the fourth day in a row as improved supply expectations affected the market, which is suffering from sluggish demand from major importers.
West Texas Intermediate crude futures are trading below $79 a barrel, after falling 1.8% on Wednesday.
The Biden administration is in talks with Venezuela to discuss a temporary lifting of sanctions that have hampered its oil sales. This comes on top of the increase in exports from Iran this month.
The rally in crude oil prices that began in late June has stalled over the past two weeks due to the deteriorating economic situation in China and signs that US interest rates will need to stay higher for longer. This was overshadowed by market tightness due to Saudi and Russian supply cuts. The restrictions helped cause a sharp drop in global oil inventories over the past month, according to data from Kepler. The Energy Information Administration said on Wednesday that crude oil inventories in the United States fell by 6.1 million barrels last week, to their lowest level since December.
Han Zhongliang, strategist at Standard Chartered, said: We see that oil prices are trading in a limited range in the short term, as the tug-of-war continues between demand concerns and supply shortages. Liang added that the price of WTI is likely to remain at $79 per barrel for the time being.
The time spreads also indicate less positivity for oil prices. The WTI spot spread is 29 cents a barrel in a bullish back-up range, compared to 59 cents at the end of last week.
