Oil futures softened during mid-day trading in Europe Sept. 29 on the back of profit-taking, a stronger US dollar and an unexpected increase in US crude inventories.
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At 1100 GMT, November ICE Brent futures were down 41 cents/b to $78.68/b, while November NYMEX WTI futures lost 39 cents/b at $74.90/b.
"Market observers attribute the price slide to profit-taking following the price surge beforehand. What is more, concerns are growing that rationing of electricity in China could put the brakes on industry there, and thus by extension on demand for oil and gas," said Carsten Fritsch, analyst energy, agriculture, precious metals at Commerzbank.
Meanwhile, a stronger US dollar may have placed additional pressure on the market, with the US dollar index (DXY) up 0.08% to 93.84 at 1100 GMT.
A stronger dollar increases the relative expense of oil for buyers with non-US dollar currency, weakening demand.
Adding to the bearish sentiment was data from the American Petroleum Institute released Sept. 28, which showed US crude inventories unexpectedly increasing by 4.1 million barrels during the week ending Sept. 24.
The API report also showed gasoline inventories rising by nearly 3.6 million barrels and distillate stocks jumping by 2.5 million barrels.
The market will now await the report by the US Energy Information Administration, due for publication Sept. 29, to draw more definitive conclusions.
Should the EIA data correspond with the API figures, it would mark the first rise in crude inventories in eight weeks.
Market participants are now focused on the upcoming meeting of OPEC+ oil ministers scheduled next week, with expectations of an increase in production levels beyond the previously agreed 4 million b/d.
"The previous production cuts were to avoid a surplus and keep prices uplifted," said Bjarne Schieldrop, chief commodities analyst at SEB.
According to Schieldrop, the approaching OPEC+ decision may have injected some added caution into the market amid Brent breaking the $80/b mark.
"No-one knows, exactly what to expect here, but it is poised to increase by more than 4 million b/d," Schieldrop added.