Oil prices are declining amid concerns about diminishing demand in both the United States and China.
Oil prices are declining amid concerns about diminishing demand in both the United States and China.
Rekindled worries about slowing demand in China and the US caused oil prices to retreat on Monday, reversing their Friday surge.
At 0051 GMT, Brent oil futures were down 35 cents, or 0.4%, at $81.08 a barrel, while U.S. West Texas Intermediate (WTI) crude futures for December were down 35 cents, or 0.5%, at $76.82.
The benchmarks experienced a nearly 2% increase last Friday following Iraq’s declaration of support for OPEC+ oil cutbacks. However, they lost roughly 4% for the week, recording their third weekly loss since May.
According to Hiroyuki Kikukawa, president of NS Trading, a division of Nissan Securities, “investors are more focused on slow demand in the United States and China while worries over the potential supply disruptions from the Israel-Hamas conflict have somewhat receded.”
The U.S. Energy Information Administration (EIA) announced last week that while consumption will decline, crude oil production in the country will increase this year by a little less than anticipated.
The world’s largest importer of crude oil, China, released weak economic data last week, which added to concerns about the decline in demand. Furthermore, China’s refiners requested reduced supplies for December from Saudi Arabia, the biggest exporter in the world.
Nevertheless, Kikukawa stated that if WTI hits $75 per barrel, oil prices would be sustained.
“If the market falls further, we will likely see support buying on expectations that Saudi Arabia and Russia would decide to continue their voluntary supply cuts after December,” Kikukawa stated.
Leading oil exporters Saudi Arabia and Russia announced last week that they would keep reducing their voluntary oil output until the end of the year because of worries about demand and economic expansion, which is keeping the price of crude oil down.
On November 26, the Organization of the Petroleum Exporting Countries (OPEC+) and its allies, which includes Russia, will convene.
According to energy services company Baker Hughes, U.S. energy companies reduced the number of oil rigs in operation for a second consecutive week, bringing it to its lowest level since January 2022. The number of rigs indicates future production.
