- Oil prices fall by more than $3 per barrel to their lowest since July 24
- China statistics raise concerns about the country’s oil demand
- Fed Chairman Powell scheduled to speak later this week
- US crude oil inventories rose by 11.9 million barrels last week – API
BENGALURU, Nov 7 (Reuters) – Oil prices fell more than 4% on Tuesday as the dollar strengthened as mixed Chinese economic data and a rise in OPEC exports eased concerns about tight markets. This was the lowest price since late July.
Brent crude oil futures closed below $84 a barrel for the first time since the October 7 attack on Israel by Islamic militant group Hamas. The global benchmark fell $3.57, or 4.2%, to settle at $81.61 per barrel, while U.S. West Texas Intermediate crude oil futures fell $3.45, or 4.3%, to $77.37.
OANDA analyst Craig Erlam said: “Traders will remain on high alert as there are signs of broader conflict in the region that could disrupt supply, but these concerns appears to be going backwards.”
UBS analyst Giovanni Staunovo said a rebound in oil exports from the Organization of the Petroleum Exporting Countries was also increasing pressure on oil prices.
“OPEC crude oil exports are up about 1 million barrels per day (bpd) from August lows as a result of a seasonal decline in domestic demand in the Middle East. Supply is too much for oil-consuming countries to absorb. It seems too much,” Staunovo said.
The premium for front-loading Brent contracts over six-month backward-loading contracts was at its lowest level in two-and-a-half months, indicating concerns about supply shortages are waning.
On the demand side, although China’s crude oil imports showed solid growth in October, total exports of goods and services contracted faster than expected.
“The data shows that China’s economic outlook continues to weaken due to weaker demand in the West, the country’s largest export destination,” said Fiona Cincotta, an analyst at City Index. .
U.S. crude oil inventories rose by about 12 million barrels last week, market sources said, citing statistics from the American Petroleum Institute. Oil prices extended losses slightly in post-settlement trading, with Brent futures falling to $81.51 by 5:02 p.m. ET.
The U.S. Energy Information Administration now expects total domestic oil consumption to fall by 300,000 barrels per day this year, overturning previous expectations for an increase of 100,000 barrels per day.
Fading investor expectations for a peak in global interest rates also pushed the U.S. dollar (.DXY) up from recent lows and boosted oil prices for holders of other currencies.
Minneapolis Fed President Neel Kashkari said the U.S. central bank may need to take further steps to bring inflation down to its 2% target. Investors are awaiting comments from Federal Reserve Chairman Jerome Powell, scheduled for Wednesday and Thursday.
“There are concerns in the oil market about both increasing supply and decreasing demand,” Mizuho analyst Robert Yawger said. “The market is certainly not tight at the moment,” he added.
Reporting by Shariq Khan in Bangalore Additional reporting by Trixie Yap in Singapore and Yuka Obayashi in Tokyo Edited by David Gregorio and Matthew Lewis
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