Brent crude futures dropped $1.36, or 1.6%, to $81.51 a barrel
by 1200 GMT and U.S. West Texas Intermediate (WTI) crude was
down $1.58, or 1.9%, at $80.01.
Both benchmark crude contracts were poised to end the week lower
after sharp swings driven by a strengthening dollar and
speculation on whether the Biden administration might release
oil from the U.S. Strategic Petroleum Reserve to cool prices.
There are positive signs on the demand side, with air travel
picking up rapidly, but tighter monetary and fiscal policy and
the looming northern hemisphere winter will act as a dampener.
The Organization of the Petroleum Exporting Countries (OPEC) on
Thursday cut its world oil demand forecast for the fourth
quarter by 330,000 barrels per day (bpd) from last month's
forecast as high energy prices hamper recovery from the economic
fallout from the COVID-19 pandemic.
"The oil market is sleepwalking into a supply surplus," said
Stephen Brennock of oil broker PVM.
"OPEC and its allies will at the very least need to put a pause
on the easing of their supply curbs in the new year. Inaction
will result in global oil stocks swelling once again."
OPEC, Russia and allies, together known as OPEC+, agreed last
week to stick to plans to add 400,000 bpd to the market each
month.
(Additional reporting by Sonali Paul in Melbourne and Koustav
Samanta in SingaporeEditing by David Goodman)
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