Oil sputters near three-month lows as demand concerns mount

Oil sputters near three-month lows as demand concerns mount

Oil prices continued to decline on Wednesday, following a drop to their lowest level in over three months. The decrease in prices is attributed to concerns about weakening demand in the United States and China. Brent crude futures fell by 8 cents to $81.53 a barrel, while U.S. crude dropped by 20 cents to $77.17. These prices represent the lowest levels since July 24. Analysts from ING noted that the market is less worried about potential disruptions in Middle Eastern supply and is instead focused on the easing of the crude supply balance.

The U.S. Energy Information Administration (EIA) announced that crude oil production in the United States will increase slightly less than previously expected, while demand is projected to decrease. The EIA revised its forecast for total U.S. petroleum consumption, now predicting a decline of 300,000 barrels per day (bpd) this year, compared to its previous forecast of a 100,000 bpd increase. Additionally, market sources reported that U.S. crude oil stocks rose by nearly 12 million barrels last week, according to figures from the American Petroleum Institute.

The EIA has decided to delay the release of weekly inventory data until the week of November 13. Meanwhile, concerns about weakening global demand were further exacerbated by data from China, the world’s largest crude oil importer, which showed a faster-than-expected contraction in total exports of goods and services. Tamas Varga of oil broker PVM attributed this contraction to a struggling domestic and global economy, which has a negative impact on the oil balance.

However, there were some positive indicators from China. October crude oil imports showed robust growth, and the country’s central bank governor stated that China is expected to achieve its gross domestic product growth target for this year. China has set a target of approximately 5% growth. Goldman Sachs analysts tempered supply concerns by estimating that seaborne net oil exports from OPEC countries will remain only 0.6 million bpd below April levels. OPEC has implemented production cuts totaling 2 million bpd since April 2023.

In more positive news for crude prices, OPEC anticipates global economic growth and increased fuel demand, despite challenges such as high inflation and interest rates. These factors contribute to a more optimistic outlook for the oil market.

About News Team

News TeamHi, 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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