Oil futures were slightly lower Thursday after monthly reports from the International Energy Agency and the Organization of the Petroleum Exporting Countries raised concerns over prospects for demand growth.

“Demand concerns connected to the spread of the COVID-19 Delta variant continue to serve as the primary market driver, with the IEA recently announcing a downward revision to demand expectations,” said Robbie Fraser, global research & analytics manager at Schneider Electric.

“Those revisions could accelerate the potential for oil to slip into oversupplied conditions after an extended undersupply following the initiation” of production cuts last by the Organization of the Petroleum Exporting Countries and their allies, known as OPEC+, he wrote in a daily market update.  OPEC+ agreed last month to gradually increase output.

“At this stage, it seems clear that jet fuel demand will see a significant impact from a downturn in international travel, but the extent of impact to gasoline and diesel remains less certain,” said Fraser.  

In its monthly report, the Paris-based IEA said it “appreciably downgraded” its outlook for growth in demand this year by 100,000 barrels a day, while upgrading its outlook for 2022 by 200,000 barrels a day. Separately, OPEC left its forecasts for 2021 and 2022 growth unchanged, while lifting its projection of non-OPEC supply.

West Texas Intermediate crude for September delivery


fell 17 cents, or 0.3%, to $69.08 a barrel on the New York Mercantile Exchange. October Brent crude

the global benchmark, was down 15 cents, or 0.2%, at $71.29 a barrel on ICE Futures Europe.

Among the petroleum products traded on Nymex, September gasoline

shed 1.3% to $2.27 a gallon and September heating oil

lost 0.6% to $2.09 a gallon.

The IEA expects crude inventories in advanced economies to draw down for the rest of 2021, “but with demand forecasted below 2019 levels throughout 2022, OPEC+ will likely have to pause its unwinding of output cuts in 2Q22 to bring the market into balance,” said Giacomo Romeo, analyst at Jefferies, in a note.

Crude saw volatile trade Wednesday after the Biden administration pressed OPEC+ to further raise output and called on the Federal Trade Commission to investigate whether any illegal conduct had contributed to rising gasoline prices.

Read: Biden takes aim at OPEC and gasoline prices — here’s why analysts are skeptical

“We imagine that there will be quite a lot of reluctance from the Saudis and the broader group to increase output further, particularly given continued uncertainty over the spread of the delta variant,” said Warren Patterson, head of commodities strategy at ING, in a note.

“We will need to see how much pressure the U.S. is willing to put on Saudi Arabia in order to see them further opening the taps,” he wrote.

Also on Nymex, natural-gas futures extended earlier declines after the Energy Information Administration on Thursday said domestic supplies of natural gas rose by 49 billion cubic feet for the week ended Aug. 6. On average, analysts forecast an increase of 44 billion cubic feet, according to a poll conducted by S&P Global Platts.

September natural gas

traded at $4.01 per million British thermal units, down 5.4 cents, or 1.3%.

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