Oil prices edged lower in Thursday’s Asian session, retreating from their highest levels in nearly two months. Investors booked profits after a strong midweek rally, while fresh concerns over supply stability and weakening demand signaled possible headwinds for crude markets.

By 03:50 GMT, Brent crude futures fell 26 cents (0.4%) to $69.05 per barrel, while West Texas Intermediate (WTI) slipped 27 cents (0.4%) to $64.72. Both benchmarks had surged 2.5% on Wednesday, their highest since August 1, supported by a larger-than-expected draw in U.S. oil inventories and geopolitical disruptions tied to Ukraine’s strikes on Russian energy infrastructure.

Market analysts say the latest pullback reflects a pause rather than a reversal, as traders reassess the balance between tightening supply and moderating demand.

OPEC+ Output and Kurdish Supply Return

Recent gains appear sentiment-driven, according to Priyanka Sachdeva, senior market analyst at Phillip Nova. “Oil looks to be hitting a ceiling, with softer seasonal demand and rising OPEC+ supplies into Q4,” she noted. “Unless another shock emerges, Brent is likely to consolidate with a slight downside bias.”

One factor weighing on sentiment is the anticipated restart of oil flows from Iraqi Kurdistan, where eight oil companies reached an agreement with Iraq’s federal and Kurdish governments to resume exports. This development has reignited oversupply concerns at a time when the market expected tighter balances.

Demand Signals Show Signs of Weakness

While geopolitical risks keep crude supported, fundamentals are showing cracks. A recent report from Haitong Securities emphasized that prices have been resilient largely because supply-demand imbalances have yet to exert significant downward pressure. However, weakening consumption is starting to surface.

A J.P. Morgan study highlighted that U.S. air passenger traffic in September rose just 0.2% year-on-year, a steep slowdown from the 1% growth seen in the prior two months. Similarly, U.S. gasoline demand has started to retreat, echoing broader signs of travel fatigue.

Key Takeaways for Investors:

• Brent crude: $69.05 (-0.4%)
• WTI crude: $64.72 (-0.4%)
• U.S. air travel demand: +0.2% YoY in September
• Kurdish oil flows set to restart, pressuring supply outlook

With seasonal demand cooling and OPEC+ maintaining higher production levels, crude prices may face renewed volatility in the weeks ahead.