You are currently viewing Oil is nearing three-month lows as demand fears grow.

Oil is nearing three-month lows as demand fears grow.

====> API shows a big rise in crude stocks in the United States -sources

====> OPEC export projections remain high, according to Goldman Sachs.
====> China’s exports continue to fall.

Reuters, November 8 – Oil prices remained under pressure on Wednesday after falling to their lowest level in more than three months the previous session, with concerns about dwindling demand in the United States and China adding to the downward pressure.

By 0914 GMT, Brent crude futures had down 8 cents to $81.53 a barrel, while US crude had fallen 20 cents to $77.17. Both had fallen to their lowest level since July 24 on Tuesday.

“The market is clearly less concerned about the potential for Middle Eastern supply disruptions and is instead focused on an easing of the balance,” ING analysts Warren Patterson and Ewa Manthey said in a client note, referring to tight oil supply circumstances.

The United States’ crude oil output will grow somewhat less than originally predicted this year, while consumption will decline, according to the Energy Information Administration (EIA) on Tuesday.

The EIA now predicts that overall US p├ętroleur consumption will decline by 300,000 barrels per day (bpd) this year, reversing its earlier prediction of a 100,000 bpd gain.

According to market sources quoting American Petroleum Institute data, crude oil stockpiles in the United States increased by about 12 million barrels last week.

The EIA will postpone the publication of weekly inventory statistics until the week of November 13.

Adding to concerns about declining global demand, statistics from China, the world’s largest crude oil importer, revealed total goods and services exports contracted more fast than intended.

This indicates “a struggling domestic and global economy, which has a negative impact on the oil balance,” according to Tamas Varga of oil trader PVM.

However, China’s crude oil imports increased significantly in October, and the country’s central bank governor stated on Wednesday that the world’s second-largest economy is on track to meet its GDP growth target this year. Beijing has set a 5% growth target for this year.

To alleviate supply concerns, Goldman Sachs analysts anticipate that OPEC’s six member nations’ seaborne net oil shipments will stay just 0.6 million bpd below April levels. Since April 2023, OPEC has announced total production cutbacks of 2 million bpd.

OPEC expects the global economy to develop and boost fuel consumption despite economic concerns such as rising inflation and interest rates, which bodes well for oil prices.