Oil Recoveries Fail Due to Oversupply Concerns

Oil prices fell on Thursday, interrupting a recent uptrend, as traders grew concerned that a revived Iran Nuclear Deal and an increase in Russian supplies would swamp the market with petroleum.

As of 20:07 EDT, West Texas Intermediate futures, the benchmark for U.S. crude, fell 0.7% to $87.5 a barrel (00:07 GMT). In early Asian trading, Brent oil futures traded in London rose 0.2% to $93.10 per barrel.

The majority of losses were caused by expectations that an agreement between Iran and Western countries would be achieved soon. The revised nuclear agreement will result in the elimination of some sanctions on Iran and the release of more than one million barrels of oil per day onto the market.

In addition, Reuters predicted that Russia would likely have an export surplus of oil this year. This, along with hints of a probable output increase by Saudi Aramco (TADAWUL:2222), the world's largest oil producer, would likely weigh on crude prices for the remainder of the year.

In addition to the United Kingdom's raised inflation rate and the eurozone's poor second-quarter GDP output, elevated inflation statistics in the United Kingdom and the eurozone's dismal second-quarter GDP output have sparked fears of an economic recession.

Earlier in the year, crude oil prices had approached record highs as a result of supply disruptions caused by the Russia-Ukraine conflict. Since then, however, they have solidified all of these advantages despite the fact that inflation and interest rates have impeded economic growth.

On Wednesday, oil prices rose from six-month lows thanks to a spate of encouraging U.S. news indicating that demand for petroleum was showing signs of revival.

The Energy Information Administration said that U.S. oil inventories decreased by 7 million barrels in the week ending August 12, which was much greater than the predicted decrease of 275,000 barrels.

This was the outcome of record-breaking exports of 5 million barrels of oil per day from the United States. Last week, U.S. oil production dipped from 12.2 million barrels per day to 12.1 million barrels per day, a slight decline.

After record-high gas prices earlier in the year dramatically curtailed demand, a larger-than-anticipated decrease in gasoline inventories indicated that U.S. consumers were returning to the pumps.

On Thursday, U.S. gasoline futures rose 0.7% to $2.9417, but remained far below 2022 highs.