• US oil prices retreated to intraday lows around $87 per barrel, erasing earlier gains as traders reassessed inventory signals and demand growth prospects.
  • The pullback reflects heightened volatility amid mixed economic data and ongoing geopolitical tensions, with market participants closely monitoring OPEC+ supply decisions.
  • Analysts note that without sustained demand acceleration or supply constraints, prices could face further downward pressure in the near term.

US oil prices pared gains on Thursday, hitting intraday lows near $87 per barrel after a brief rally earlier in the session. The reversal came as traders digested the latest inventory data, which showed a larger-than-expected build in crude stocks, according to people familiar with the matter. This pause in upward momentum underscores the fragile balance between supply dynamics and global demand uncertainties, with Brent crude also dipping slightly in tandem.

Efforts to stabilize prices have hit a snag, as recent economic indicators from China and the US pointed to softer-than-anticipated growth, dampening optimism about fuel consumption. Without a significant shift in demand trends, the market could see continued volatility, with some analysts warning that prices might test lower support levels if inventory levels remain elevated. A trader at a major energy firm, who requested anonymity due to company policy, noted, "We're seeing a classic case of profit-taking after the earlier run-up, as the fundamentals haven't fully caught up."

Geopolitical headlines added to the choppy trading environment, with tensions in key shipping routes injecting a risk premium that briefly supported prices before fading. Market participants are now eyeing upcoming OPEC+ meetings, where production targets could be adjusted in response to these price movements. Attempts to reach out to OPEC representatives for comment were unsuccessful at the time of publication.

In the background, US shale producers have been cautiously increasing output, but capex plans remain tempered by price sensitivity, according to recent earnings calls. This supply-side flexibility could cap any sustained rallies if demand fails to pick up pace. Meanwhile, refiners are adjusting their hedging strategies in light of the price dip, which may influence near-term market liquidity.

Looking ahead, short-term forecasts suggest continued range-bound trading as markets await clearer signals from macroeconomic data and policy announcements. Some experts believe that if inventory builds persist, prices could drift toward the mid-$80s, though any supply disruptions or stronger demand prints could quickly reverse the trend. The overall tone remains cautious, with traders balancing immediate inventory concerns against longer-term geopolitical and economic risks.

Correction: An earlier version of this article misstated the exact price level; it has been updated to reflect intraday lows near $87 per barrel.