Sinking Oil Prices Reflect Weak Demand in China
In the world of black gold, oil prices took a dip on Friday as China, the largest importer of crude oil, showed signs of struggling demand amidst its slow economic recovery.
Brent and WTI Prices Take a Hit
Brent crude futures saw a decrease of 65 cents, or 0.9 percent, landing at $71.91 a barrel by 7:50 a.m. Saudi time. Meanwhile, US West Texas Intermediate crude futures dropped 62 cents, or 0.9 percent, to $68.08.
Weekly Forecast: Brent and WTI on the Decline
For the week, Brent is expected to fall by 2.7 percent, while WTI is set to decline by 3.3 percent.
Challenges in the Oil Market
Market strategist Yeap Jun Rong from IG noted that despite oil prices stabilizing around the $71.00 support level, the lack of a strong catalyst for a bullish trend indicates a slow price recovery.
Concerns Over Supplies and Economic Recovery
Higher supplies from the US and OPEC+ paired with uncertainties surrounding China’s economic rebound are causing worries in the market. Additionally, the likelihood of a December rate cut seems uncertain under a less dovish Federal Reserve.
China’s Oil Refiners Face Challenges
China’s oil refiners processed 4.6 percent less crude in October compared to the previous year, marking the seventh consecutive month of decline. This decrease in production coincided with a slowdown in factory output growth and ongoing demand issues in the property sector.
Gloomy Market Fundamentals
Major forecasters have indicated bearish market fundamentals, with the International Energy Agency projecting a global oil supply surplus in 2025. Despite efforts from OPEC+ to curb production, rising output from other producers could outpace demand.
US Inventory Data
US crude inventories saw a significant increase of 2.1 million barrels last week, well above analysts’ expectations. Gasoline stocks fell to their lowest levels since November 2022, while distillate stockpiles unexpectedly decreased by 1.4 million barrels.