WTI drops to two-week low below $71.00 on easing fears of oil supply disruption

• WTI price loses ground to around $70.70 in Thursday’s early Asian session. 
• Easing fears of an oil supply disruption in the Middle East, sluggish global oil demand outlook weigh on the WTI price. 
• Any positive development surrounding more Chinese fresh stimulus plans could cap the WTI’s downside. 

West Texas Intermediate (WTI), the US crude oil benchmark, is trading around $70.70 on Thursday. The WTI price edges lower after selling off on reports that Israel will not attack Iran’s oil facilities.

Israel told the United States that a planned retaliatory attack on Iran won’t target nuclear and oil facilities, according to senior Biden administration officials, a promise sought by the White House to head off further Middle East escalation and to avoid a potential oil price increase, per the Wall Street Journal. Traders will closely watch the developments surrounding the geopolitical tensions in the Middle East. Any signs of escalation could lift the WTI price. 

US crude oil inventories rose more than expected last week. According to the American Petroleum Institute (API), crude oil stockpiles in the United States for the week ending October 11 fell by 1.58 million barrels, compared to a rise of 10.9 million barrels in the previous week. The market consensus estimated that stocks would increase by 2.3 million barrels.

The Organisation of the Petroleum Exporting Countries (OPEC) and the International Energy Agency (EIA) this week cut their 2024 global oil demand growth forecasts. The IEA estimated global oil demand to grow 1.2 million barrels per day to 104.3 million bpd next year, about 300,000 bpd below prior forecasts. Furthermore, stimulus measures in China fail to boost the black gold price. 

"On the top of every ardent bear's wish list are a stuttering Chinese economy, relative calm in the Near East, and downward revisions in global oil demand growth. These wishes were granted at the beginning of the week," noted Tamas Varga, an analyst at TP ICAP.

The Chinese officials will hold a joint briefing at 2.00 GMT on Thursday on potential measures to support the economy. Additional fresh stimulus plans from China, the top largest consumer of oil in the world, could provide some support to the WTI price in the near term.