Rystad Energy’s daily market comment from our Senior Oil Markets Analyst Paola Rodriguez-Masiu

The oil market has enjoyed five months of solid gains, but oil prices kick off September on a weak note. During the first week of this month, the Brent benchmark is set to register the biggest weekly decline since early June on concerns about weaker demand and fears of supply increases.

Despite the price gains today, which somehow smoothened the losses of the week, the bigger market picture is an overall bearish sentiment that kicked off with lower gasoline demand reports on Wednesday.

Brent prices initially hedged lower as traders focused on the reported drop in gasoline demand.

Prices were also weighed down by the weaker-than-expected jobs recovery and the spillover effects of a sharp sell-off of tech stocks, caused by general higher-level worries about the recovery of the US economy as a whole.

Prices this week were also pressured by reports of Iraq seeking an exemption for its compensatory quotas, and then by an update on the country discussing a time extension to implement its compensatory cuts.

As OPEC members continue to suffer from a double whammy of lower-than-anticipate demand and lower prices, news like this send chills to the market.

The weekly price decline exposes how vulnerable the market currently is, having to deal not only with a fragile demand recovery but also with the threat of supply coming back quicker than anticipated due to the amounting economic pressure in OPEC+ economies.

Looking at the price rise today, it more looks like a correction of the lows that prices reached during the last days, rather than an uplift attributed to a particular bullish indicator.

This article does not necessarily reflect the opinion of the AJOT editorial board or Fleur de lis Publishing, Inc. and its owners.