By Peter Nurse
Investing.com — Oil prices fell Friday, as uncertainty surrounding the market’s demand/supply balance prompted traders to cash in some of the week’s strong gains.
By 10:10 ET (14:10 GMT), futures traded 2.6% lower at $91.91 a barrel, while the contract fell 2% to $97.60.
U.S. were down 1.1% at $3.0392 a gallon.
Brent was on track to rise nearly 4% this week and the WTI contract almost 5%, rebounding after last week’s slump, which was the biggest weekly decline since April 2020 amid fears that rising inflation and interest rate hikes will hit economic growth and demand for fuel.
Both the International Energy Agency and the Organization of Petroleum Exporting Countries released their monthly market reports on Thursday but took differing views on the demand outlook.
The IEA raised its demand growth forecast by 380,000 barrels per day to 2.1 million barrels per day citing gas-to-oil switching, while OPEC cut its forecast by 260,000 barrels per day to 3.1 million barrels per day.
Turning to supply, the IEA also raised its outlook for Russian oil supply by 500,000 barrels per day for the second half of 2022 but said OPEC would struggle to boost production.
Additionally, six oil and gas fields in the Gulf of Mexico were shut on Thursday after a leak halted two pipelines in the region, potentially stopping as much as 500,000 barrels a day of oil from being transported from the Gulf of Mexico to the coast.
Both pipelines are expected to resume service Friday as the leak has been contained.
Russia’s pipeline operator Transneft also indicated that oil shipments to three countries in central Europe could resume soon. Transneft was quoted by Russian newswires as saying that its payment of transit fees had been accepted by a European bank, apparently removing the bureaucratic obstacle that had led to shipments being stopped on August 4.
“All things considered, the price moves highlight just how tight the market remains and how sensitive it therefore still is to spikes,” said Craig Erlam, an analyst at OANDA.
“A deal between the U.S. and Iran could go some way to changing that but I think it’s clear traders are not banking on that given how the talks have gone until this point.”
A European Union proposal to revive the 2015 Iran nuclear deal “can be acceptable if it provides assurances” on Tehran’s key demands, the state news agency IRNA said on Friday.
The EU said on Monday it had put forward a “final” text following four days of indirect talks between U.S. and Iranian officials in Vienna.