With ICE Brent dropping to $93 per barrel after several consecutive daily increases, demand woes in the U.S. and China seem to be temporarily overpowering upside factors such as continuously shrinking global inventories. Global markets are in a state of chaos, OilPrice said.

Inflation is rearing its ugly head again, with U.S. consumer prices gaining 0.1% month-on-month in August, just when the analytical community and U.S. Federal Reserve alike expected a month-on-month dip. This will only bring grist to the mill of the Fed, meeting next week to discuss further interest rate hikes. But there the bullish sentiment should still be there with U.S. Secretary of State Anthony Blinken claiming the Iranian nuclear deal is unlikely in the near term (most probably a coded way of saying until mid-term elections) and that Iranian proposals were a step backward. 

Refiners and energy-intensive industries are already adding some 350,000 b/d of incremental oil demand, coming from the burning of fuel oil and other oil products (instead of gas). Despite the drop-off in European spot prices, the cost of natural gas remains prohibitively high, paving the way for global gas-to-oil switching in the power generation industry. Right now, benchmark European and Asian LNG prices are five to six times higher than high sulfur fuel oil values, meaning most power generation companies avoid using gas whenever possible.