Crude oil futures declined significantly in Thursday's trading session, pressured by a bearish shift in the demand outlook from a major energy watchdog and swelling U.S. inventories.
Prices and Key Drivers
Brent crude futures fell $1.26, or 1.8%, to $68.14 a barrel. U.S. benchmark West Texas Intermediate (WTI) crude dropped $1.24, or 1.9%, to $63.39. The sell-off was triggered by the International Energy Agency's (IEA) decision to lower its forecast for global oil demand growth in 2026 to 850,000 barrels per day, a reduction of 80,000 bpd from its previous estimate. The agency cited economic uncertainties and elevated prices as factors dampening consumption.
Adding to the downward pressure, the U.S. Energy Information Administration reported a substantial 8.5-million-barrel increase in commercial crude stocks for the latest week, bringing total inventories to 428.8 million barrels. This larger-than-expected build signals weaker immediate demand.
Market Context and Analyst Views
The price drop marks a reversal from Wednesday's gains, which were supported by geopolitical tensions. "The market just ran out of steam," noted Phil Flynn, senior analyst at Price Futures Group, highlighting how the IEA's revised outlook directly impacts storage calculations and refiner purchasing plans. The IEA also maintained its projection for a significant supply surplus this year.
Other factors provided a mixed backdrop. Easing concerns about an immediate U.S. strike on Iran removed a prior source of supply risk premium. Meanwhile, OPEC's monthly report indicated lower expected demand for its crude in the second quarter, though it noted a weaker U.S. dollar could support consumption.
Looking ahead, traders are focusing on upcoming inventory data and producer supply decisions. The market remains sensitive to any sudden disruptions or breakdowns in diplomatic talks, which could prompt a rapid price rebound.
