Oil dives 3% to lowest since July on demand worry, strong dollar

Oil dives 3% to lowest since July on demand worry, strong dollar

Oil prices fell more than 3% on Tuesday, reaching their lowest level since late July. This drop was attributed to mixed Chinese economic data and increased OPEC exports, which alleviated concerns about tight markets. Additionally, the strengthening of the dollar contributed to the decline in oil prices.

Brent crude futures dropped by $2.95, or 3.5%, to $82.23 a barrel, while U.S. West Texas Intermediate crude fell to $77.94 a barrel, down $2.88, or 3.6%. Both contracts hit their lowest levels since July 24, with Brent expected to close below $84 a barrel for the first time since the Hamas Islamists’ attack on Israel in October.

Despite fears of a wider conflict in the region that could disrupt supplies, traders are becoming less concerned. OANDA analyst Craig Erlam stated that traders will remain vigilant for any signs of a conflict but noted that these fears are subsiding.

The recovery in oil exports from the Organization of Petroleum Exporting Countries (OPEC) also contributed to the downward pressure on oil prices. UBS analyst Giovanni Staunovo explained that OPEC crude exports have increased by about 1 million barrels per day since their August low due to lower domestic demand in the Middle East. This surplus supply is challenging for oil-consuming nations to absorb.

The premium on front-month loading Brent contracts over those loading in six months reached a 2-1/2-month low, indicating reduced concerns about supply deficits.

On the demand side, China’s crude oil imports in October showed robust growth, but its total exports of goods and services contracted at a faster pace than expected. City Index analyst Fiona Cincotta attributed this decline to the deteriorating demand in China’s largest export destination, the West.

The U.S. Energy Information Administration revised its forecast, now expecting total petroleum consumption in the country to decrease by 300,000 barrels per day this year, contrary to its earlier projection of a 100,000 barrels per day increase.

The strengthening of the U.S. dollar, driven by fading investor hopes for a peak in global interest rates, also contributed to the decline in oil prices. This makes oil more expensive for holders of other currencies.

Investors are eagerly awaiting comments from Federal Reserve Chair Jerome Powell, scheduled for Wednesday and Thursday, as they anticipate further actions to reduce inflation and meet the 2% target.

API industry data on U.S. crude stockpiles is expected to be released after 2000 GMT on Tuesday.

In conclusion, oil prices fell to their lowest level since late July due to mixed Chinese economic data, increased OPEC exports, and the strengthening of the U.S. dollar. Traders are becoming less concerned about supply disruptions, and investors are awaiting comments from the Federal Reserve Chair.

About News Team

Hi, I'm Alex Perez, an experienced writer with a focus on lifestyle and culture news. From food and fashion to travel and entertainment, I love exploring the latest trends and sharing my insights with readers. I also have a strong interest in world news and business, and enjoy covering breaking stories and events.

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