Oil dips on profit taking

WTI crude futures slipped below $65 per barrel on Thursday, giving back part of the strong rally that had lifted prices to a three-week high. The decline was largely attributed to profit-taking, as traders locked in gains after a multi-session rebound.

Earlier in the week, government data surprised markets by showing a decline in US crude inventories, defying expectations for a build. The drawdown reinforced concerns over tightening supply, particularly at a time when geopolitical risks are running high. Ukraine’s intensified drone strikes on Russian energy infrastructure have caused localized fuel shortages and raised fears of export restrictions, amplifying worries about disruptions in global supply chains.

Additional support for crude prices came from the continued suspension of Kurdish oil exports amid unresolved debt disputes, which has kept a meaningful volume of supply offline. NATO’s warning of a “robust response” to Russian airspace incursions also injected a risk premium, as traders reassessed potential military and geopolitical spillovers that could affect energy flows.

Despite these bullish elements, crude remains under pressure from seasonal dynamics. With peak summer demand season fading, refiners are expected to lower runs, reducing crude intake. Analysts also point to lingering oversupply concerns, particularly as US production remains near record highs and OPEC+ output has been edging higher. At the same time, global demand growth, while still solid, has slightly undershot earlier projections, tempering the upward momentum in prices.

Market participants now face a tug of war between geopolitical risks that could constrain supply and fundamental signals pointing to a more balanced or even oversupplied market in the months ahead. Traders are also watching closely for any updates on Kurdish export talks and Russia’s ability to restore damaged energy infrastructure. In the near term, volatility is likely to remain elevated, with prices fluctuating between supply risk premiums and demand-side caution.