(Reuters) - Oil prices drifted lower on Thursday, as the market grappled with concern over increasing U.S. inflation, and after OPEC cut its 2021 oil demand forecast due to high prices.
Brent crude futures were down 46 cents to $82.19 a barrel by 12:24 p.m. EDT (1724 GMT) after falling earlier to $81.66. U.S. West Texas Intermediate (WTI) futures were down 50 cents to $80.84 after hitting a session low of $80.20.
The Organization of the Petroleum Exporting Countries (OPEC) said in a monthly report it expects oil demand to average 99.49 million barrels per day (bpd) in the fourth quarter of 2021, down 330,000 bpd from last month's forecast.
"A slowdown in the pace of recovery in the fourth quarter of 2021 is now assumed due to elevated energy prices," OPEC said in the report, also citing slower-than-expected demand in China and India for the downward revision.
OPEC sees world consumption surpassing the 100 million bpd mark in the third quarter of 2022, three months later than forecast last month. The producer group has cited the uncertain path for demand as a primary reason why it will not increase supply to satisfy calls for more crude from the United States.
"Whether the acknowledgement of higher prices affecting economic activity and demand will encourage the group to increase output more at an upcoming meeting is another thing, especially with some struggling to meet output targets as it is," said Craig Erlam, senior market analyst at OANDA.
U.S. consumer price inflation rose by 6.2%, according to data released Wednesday, the fastest rate in 30 years, driven largely by steeper energy prices, pushing the dollar higher and sending Brent and WTI crude down by 2.5% and 3.3%, respectively.
U.S. President Joe Biden said he asked the National Economic Council to work to reduce energy costs and the Federal Trade Commission to push back on market manipulation in the energy sector to reverse inflation.
Brent crude has gained more than 60% this year and hit a three-year high of $86.70 on Oct. 25. However, oil prices appear to be consolidating below $85 a barrel, Norbert Rucker, head of economics at Julius Baer, said in a note.
"We could be looking at early signs of a fundamental transition towards an easing market, not least as oil demand should only grow gradually going forward with the pick-up in U.S. shale and petro-nation supply."
