Oil dives 4% to lowest since July on demand worry, strong dollar

Oil dives 4% to lowest since July on demand worry, strong dollar

Oil prices fell over 4% 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 closed below $84 a barrel for the first time since the Oct. 7 attack on Israel by Hamas Islamists. The global benchmark settled at $81.61 a barrel, down 4.2%, while U.S. West Texas Intermediate crude futures settled at $77.37 a barrel, down 4.3%.

According to OANDA analyst Craig Erlam, traders are keeping an eye out for any signs of a wider conflict in the region that could disrupt oil supplies. However, fears of such a conflict seem to be diminishing.

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

The premium on front-month loading Brent contracts over those loading in six months has 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.

Market sources reported that U.S. crude oil stocks rose by almost 12 million barrels last week, according to American Petroleum Institute figures. This news caused oil prices to extend their losses slightly in post-settlement trading.

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

The U.S. dollar’s recent rise, driven by fading investor hopes for a peak in global interest rates, has made oil more expensive for holders of other currencies.

Investors are eagerly awaiting comments from Federal Reserve Chair Jerome Powell, scheduled for Wednesday and Thursday. Minneapolis Federal Reserve President Neel Kashkari stated that the central bank may need to take further action to reduce inflation and meet its 2% target.

Mizuho analyst Robert Yawger expressed concerns about rising supply and declining demand in the oil markets. He emphasized that the market is currently not tight.

In conclusion, oil prices have experienced a significant decline due to mixed Chinese economic data, increased OPEC exports, and the strengthening of the U.S. dollar. Concerns about supply deficits have diminished, and there are worries about rising supply and falling demand in the oil markets.

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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