Oil slides over 2% on demand worries, lowest settlement in 3 months
The sun is seen behind a crude oil pump jack in the Permian Basin in Loving County, Texas, U.S., Nov 22, 2019. REUTERS/Angus Mordant/File photo
NEW YORK –Oil prices slid over 2 percent on Wednesday to their lowest in more than three months on concerns over waning demand in the U.S. and China.
Brent crude futures settled down $2.07, or 2.5 percent, to $79.54 a barrel. U.S. crude lost $2.04, or 2.6 percent, to $75.33. Both benchmarks hit their lowest since mid-July.
“The market is clearly less concerned about the potential for Middle Eastern supply disruptions and is instead focused on an easing in the balance,” ING analysts Warren Patterson and Ewa Manthey said in a note to clients, referring to crude supply conditions.
Also weighing on prices, U.S. crude oil stocks rose by almost 12 million barrels last week, market sources said late on Tuesday, citing American Petroleum Institute figures.
If confirmed, that would be biggest build since February. However, the U.S. Energy Information Administration (EIA) has delayed release of weekly oil inventory data, usually on Wednesdays, until Nov. 15 to complete a systems upgrade.
U.S. crude production will rise this year by slightly less than expected but petroleum consumption will fall by 300,000 barrels per day (bpd), the EIA said on Tuesday, reversing its previous forecast of a 100,000-bpd increase.
Data from China, the world’s biggest crude oil importer, showed its total exports of goods and services contracted faster than expected, feeding worries about the energy demand outlook.
READ: China’s imports unexpectedly grew in Oct, exports extended decline
In the euro zone, data showing falling retail sales also highlighted weak consumer demand and the prospect of recession.
“The meltdown we’ve seen in prices is reflecting two things: concerns about the global economy hitting a brick wall based on data out of China and also a sense of confidence that the war in Israel and the Gaza Strip is not going to impact supply,” said Phil Flynn, analyst at Price Futures Group.
Still, China’s October crude oil imports showed robust growth and its central bank governor said the world’s second-biggest economy is expected to hit its gross domestic product growth target this year. Beijing has set a target of about 5 percent growth.
Analysts from Goldman Sachs estimated seaborne net oil exports by six countries from oil producer group OPEC will remain only 600,000 bpd below April levels. OPEC has announced cumulative production cuts amounting to 2 million bpd since April 2023.
Russia, a part of the producer groups known as OPEC+, is considering lifting an export ban on some grades of gasoline, Interfax news agency quoted Energy Minister Nikolai Shulginov as saying.
READ: Russia lifts ban on most of diesel exports
Moscow introduced a ban on fuel exports on Sept. 21 to tackle high domestic prices and shortages. The government eased restrictions on Oct. 6, allowing diesel exports by pipeline, but kept measures on gasoline exports.
Barclays lowered its 2024 Brent crude price forecast by $4 to $93 a barrel.
