By Ken Afor
On Tuesday, international oil prices sank beyond 4%, attaining their least cost since late July, mainly because of conflicting Chinese economic figures and escalating OPEC shipments that reduced worries regarding scarce supplies, along with the appreciation of the USD.
Brent crude futures closed at $81.61 a barrel, a decrease of 4.2%, for the first time since the October 7th attack on Israel by the Hamas. Similarly, U.S. West Texas Intermediate crude futures also decreased by 4.3%, settling at $77.37 a barrel.
“Traders will remain on high alert for signs of a wider conflict emerging in the region that could disrupt supplies, but it seems those fears are subsiding,” OANDA analyst Craig Erlam said.
Analyst Giovanni Staunovo of UBS noted that a resurgence of oil exports from the Organization of Petroleum Exporting Countries, OPEC, additionally exerted downward pressure on oil prices.
“OPEC crude exports are up by about 1 million barrels per day (bpd) since their August low, as a result of seasonally lower domestic demand in the Middle East. It seems there is too much supply to be absorbed by oil consuming nations,” Staunovo said.
The 2-1/2-month low of the premium on Brent contracts to be loaded within a month compared to those loaded in six months showed lesser apprehensions for supply shortages.
China experienced robust growth in its crude oil imports in October, however, its exports of goods and services diminished at a faster rate than anticipated.
“The data signals the continued decline in the Chinese economic outlook driven by deteriorating demand in the country’s largest export destination: the West,” City Index analyst Fiona Cincotta said.
China’s imports of crude oil in October displayed considerable growth, however its exports of goods and services decreased faster than anticipated.
The U.S. Energy Information Administration now anticipates a decrease of 300,000 barrels per day (bpd) in total petroleum consumption in the United States for the current year, diverging from its initial estimations of an augmentation of 100,000 bpd.
Additionally, aspirations of a maximum in international rates, which have diminished among investors, have helped propel the US dollar (.DXY) away from recent lows, making oil more costly for those with distinct currencies.
Minneapolis Federal Reserve President Neel Kashkari has suggested that the U.S. central bank may need to take additional steps in order to bring inflation to its 2% objective.
Investors are waiting to hear from Fed Chair Jerome Powell, with his remarks anticipated for Wednesday and Thursday.
“There are concerns in the oil markets about both rising supply and sliding demand,” said Mizuho analyst Robert Yawger. “It’s certainly not a tight market right now,” he added.
