By Peter Nurse
Investing.com -- Crude weakened Thursday, extending sharp losses after OPEC warned that the current elevated energy prices would likely have a negative impact on demand in the final quarter of this year.
By 9 AM ET (1400 GMT), U.S. crude futures were down 0.5% at $80.97 a barrel, after dropping 3.3% on Wednesday, while Brent futures fell 0.3% to $82.41, after falling 2.5% during the previous session.
U.S. Gasoline RBOB Futures were up 0.2% at $2.3005 a gallon.
The Organization of the Petroleum Exporting Countries, a group of major producers known as OPEC, said in its monthly report released Thursday that it expects oil demand to average 99.49 million barrels per day in the fourth quarter of 2021, down 330,000 barrels from last month's forecast.
The group cited high energy prices as the reason for the reduction in oil demand, but it stuck to its prediction of robust growth to above pre-pandemic rates in 2022.
Oil prices suffered sharp falls on Wednesday after data showed U.S. inflation increased at the fastest rate in 30 years, lifting the dollar on increased expectations of an early Federal Reserve interest rate hike to the detriment of commodities priced in the U.S. currency.
Also weighing was the rise in U.S. oil stocks after a government release of some strategic reserves, increasing speculation that the U.S. government will tap the country’s Strategic Petroleum Reserve to drive down prices.
That said, it’s debatable how seriously traders were taking the potential threat of additional supply from the SPR given the Biden administration has largely followed policies that indicated it wanted to limit domestic oil and gas production.
“Ultimately, it’s OPEC+ that holds the power at this point and it’s unlikely that we’ll see any action from them this side of the new year. That should keep oil prices elevated for now,” according to analysts at MarketPulse.
Earlier this month OPEC and its allies, a group known as OPEC+, decided to stick to its existing pace of easing the record output cuts put in place at the start of the pandemic, agreeing to increase supply by just 400,000 barrels a day.