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WTI Crude Prices Plunge Amid Concerns Over US-China Economic Slowdown

Crude oil futures experienced a significant downturn, reaching a four-month low on Thursday (Nov. 16) as apprehensions mounted regarding the global oil demand outlook. The market sentiment faltered notably after the release of lackluster economic data from both the United States and China.

West Texas Intermediate (WTI) crude futures plummeted by $3.76, marking a staggering 4.9% decline to conclude at $72.90 per barrel. Concurrently, Brent crude futures also faced a substantial dip, sliding by $3.76 or 4.6%, to settle at $77.42 per barrel.

Both WTI and Brent oil prices closed at their lowest levels since July 7, indicating market concerns about a broader economic slowdown affecting oil demand. The fears stemmed from weakened economic indicators disclosed by both the US and China, pivotal players in the global economy.

The downturn in the US economy was highlighted by a 0.6% fall in industrial production for October, coupled with a 13,000 rise in initial jobless claims, surging to 231,000 – the highest level witnessed in three months. Additionally, US retail sales encountered a 0.1% decline in October, reflecting the first decrease since March, largely influenced by reduced automobile and furniture sales.

Meanwhile, the National Bureau of Statistics (NBS) of China reported a substantial 0.38% drop in new home prices across 70 Chinese cities in October, marking the most significant decline in eight years. This downturn underscores the deterioration of China’s real estate market, despite the government’s persistent efforts to reignite demand in the sector.

Further pressuring the market, the US Energy Information Administration (EIA) revealed a 3.6 million barrel increase in US crude oil stocks last week, slightly exceeding analysts’ projections by 1.8 million barrels. Moreover, US crude oil production surged to a record high of 13.2 million barrels per day in October, adding to the downward pressure on oil prices.

The collective impact of weakened economic indicators from both economic powerhouses, coupled with rising oil inventories and record-high production in the US, underscores the prevailing concerns about global economic growth and its direct impact on oil demand.

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Friday, November 17, 2023

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