Oil prices experienced a setback on Wednesday, following a drop to their lowest point in over three months in the previous session. This decline was primarily due to concerns about diminishing demand in the United States and China, the world’s leading oil consumers.
Brent crude futures made a slight uptick of 4 cents, reaching $81.65 a barrel, while U.S. crude futures decreased by 14 cents, landing at $77.24 a barrel. Both had reached their lowest levels since July 24 on Tuesday.
Market analysts from ING bank, Warren Patterson and Ewa Manthey, noted that the market’s focus has shifted away from potential disruptions in Middle Eastern oil supply and is now centered on the easing of tight oil supply conditions.
Reports from market sources indicated that U.S. crude oil stocks increased by nearly 12 million barrels the previous week, as per American Petroleum Institute data.
The U.S. Energy Information Administration (EIA) has decided to postpone the release of weekly inventory data until the week of November 13.
The EIA revised its earlier projections, stating that U.S. crude oil production for this year would rise slightly less than previously anticipated, while demand is expected to decline. The agency now predicts a 300,000 barrel per day (bpd) decrease in total petroleum consumption, reversing its earlier forecast of a 100,000 bpd increase.
Additionally, the EIA anticipates a modest increase in Venezuela’s crude oil production, to an average of 900,000 bpd by the end of 2024, as U.S. sanctions ease.
Goldman Sachs analysts estimated that seaborne net oil exports from six OPEC countries, which collectively announced production cuts of 2 million bpd since April 2023, remain only 0.6 million bpd below April levels.
Data from China, the world’s largest crude oil importer, also raised concerns about the demand outlook. While crude oil imports in October showed robust growth, China’s overall exports of goods and services contracted more than expected, raising worries about reduced global energy demand.
Furthermore, a slight recovery in the U.S. dollar from recent lows added pressure to oil prices, as it makes oil more expensive for holders of other currencies.