HOUSTON: Oil prices dropped on Thursday due to falling demand, retreating fears of renewed Middle East conflict and expected increases in supply.
Brent crude oil futures settled at US$67.52 a barrel down US$1.88, or 2.71%. US West Texas Intermediate crude finished at US$62.84 a barrel, down US$1.79, or 2.77%.
Global oil demand will rise more slowly than previously expected this year, the International Energy Agency said on Thursday, while projecting a sizeable surplus despite outages that cut supply in January.
The Brent and WTI benchmarks reversed gains to turn negative after the IEA's monthly report, after deriving support earlier from concerns over the US-Iran backdrop.
Israeli Prime Minister Benjamin Netanyahu said as he was departing Washington that US President Donald Trump appeared to be framing a resolution to the conflict with Iran over nuclear weapons.
"The fact that President Trump continues to negotiate with Iran would lead to a reduction of geopolitical risk," said Andrew Lipow, president of consultancy Lipow Oil Associates.
The IEA forecast offered a "pretty significant" reduction in demand for 2026, Lipow said. "This market is anticipating an increase in supply from Venezuela," he said.
On Wednesday, Trump said after talks with Netanyahu that they had yet to reach a definitive agreement on how to move forward with Iran but that negotiations with Tehran would continue.
Trump said on Tuesday he was considering sending a second aircraft carrier to the Middle East if a deal is not reached with Iran.
The date and venue of the next round of talks have yet to be announced. A hefty build in U.S. crude inventories had capped the early price gains.
US crude inventories rose by 8.5 million barrels to 428.8 million barrels last week, the Energy Information Administration said, far exceeding the 793,000 increase expected by analysts in a Reuters poll.
US refinery utilisation rates dropped by 1.1 percentage points in the week to 89.4%, EIA data showed.
On the supply side, Russia's seaborne oil products exports in January rose by 0.7% from December to 9.12 million metric tons on high fuel output and a seasonal drop in domestic demand, data from industry sources and Reuters calculations showed. — Reuters
