Crude oil futures saw a significant dip on Wednesday, with prices reaching their lowest levels in over three months, as worries about slowing oil demand in the United States and China weighed heavily on investors.
WTI Crude Oil Falls to Lowest Since July 17 WTI crude futures experienced a notable decline, falling by $2.04, or 2.6%, to conclude the trading day at $75.33 per barrel. This closing price marked the lowest level since July 17.
Brent Crude Follows Suit BRENT crude futures also faced a significant drop, shedding $2.07, or 2.5%, to close at $79.54 per barrel, which represented the lowest closing level since July 19.
The decline in oil prices was attributed to several factors. Analyst Warren Paterson from ING noted that market concerns over potential disruptions to oil supplies in the Middle East had waned, putting downward pressure on prices. Additionally, the American Petroleum Institute (API) released a report indicating that U.S. crude oil stocks surged by nearly 12 million barrels in the past week. This stark increase in oil inventories starkly contrasted with analysts’ expectations of a 300,000-barrel decline.
On a related note, the U.S. Energy Information Administration (EIA) announced the postponement of its oil stock report, citing system improvements, with regular reporting resuming on Wednesday, November 15.
On Tuesday, November 7, the EIA issued a report adjusting its oil price forecasts for 2024. The agency anticipated WTI oil prices to reach $89.24 per barrel, a 1.8% decrease from its previous October forecast. The forecast for Brent oil prices in 2024 was similarly adjusted to $93.24 per barrel, reflecting a 1.8% decrease compared to the previous October estimate.
The EIA’s projections also indicated a 1% decline in U.S. gasoline consumption in 2024, leading to the lowest per capita gasoline use among Americans in two decades. This trend is attributed to an increase in remote work, more fuel-efficient vehicles, and reduced oil demand resulting from higher oil prices.
Further intensifying market concerns, weak economic data from China has played a role in the downward pressure on oil prices. The Chinese Customs Office disclosed a 6.4% drop in China’s exports to $274.8 billion in October, surpassing analyst expectations of a 3.3% decline. This marked the sixth consecutive month of declining exports, underscoring the impact of sluggish global demand for Chinese goods and services.
Investors are closely monitoring China’s inflation figures. The National Bureau of Statistics of China is set to release the Consumer Price Index (CPI) and Producer Price Index (PPI) for October. According to a Bloomberg News poll, analysts anticipate a 0.1% decline in CPI and a 2.7% year-on-year decrease in PPI for October.
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Thursday, November 9, 2023