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Money & Business: Oil Dives 4% To Lowest Since July

MONEY & BUSINESS: Oil dives 4% to lowest since July on demand worry, strong dollar – One America News Network

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By Shariq Khan

8:23 PM UTC – November 7, 2023

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BENGALURU (Reuters) – Oil prices fell more than 4% on Tuesday to their lowest since late July, as mixed Chinese economic data and rising OPEC exports eased fears about tight markets and as the dollar strengthened.

Brent crude futures closed below $84 a barrel for the first time since Hamas Islamists’ Oct. 7 attack on Israel. The global benchmark settled at $81.61 a barrel, down $3.57, or 4.2%, while U.S. West Texas Intermediate crude futures settled at $77.37 a barrel, down $3.45, or 4.3%.

“Traders will remain on high alert for signs of a wider conflict emerging in the region that could disrupt supplies, but it seems those fears are subsiding,” OANDA analyst Craig Erlam said.

A recovery in oil exports from the Organization of Petroleum Exporting Countries also added to the pressure on oil prices, UBS analyst Giovanni Staunovo said.

“OPEC crude exports are up by about 1 million barrels per day (bpd) since their August low, as a result of seasonally lower domestic demand in the Middle East. It seems it is too much supply to be absorbed by oil consuming nations,” Staunovo said.

The premium on front-month loading Brent contracts over ones loading in six months was at a 2-1/2-month low, indicating less concern about supply deficits.

On the demand side, China’s crude oil imports in October showed robust growth but its total exports of goods and services contracted at a quicker pace than expected.

“The data signals the continued decline in the Chinese economic outlook driven by deteriorating demand in the country’s largest export destination: the West,” City Index analyst Fiona Cincotta said.

The U.S. Energy Information Administration now expects total petroleum consumption in the country to fall by 300,000 bpd this year, reversing its earlier forecast of a 100,000 bpd increase.

Fading investor hopes for a peak in global interest rates also helped lift the U.S. dollar (.DXY) from recent lows, making oil more expensive for holders of other currencies.

The U.S. central bank may have to do more to reduce inflation to its 2% target, Minneapolis Federal Reserve President Neel Kashkari said. Investors are awaiting comments from Fed Chair Jerome Powell, due on Wednesday and Thursday.

“There are concerns in the oil markets about both rising supply and sliding demand,” said Mizuho analyst Robert Yawger. “It’s certainly not a tight market right now,” he added.

API industry data on U.S. crude stockpiles is expected after 2000 GMT on Tuesday.

Reporting by Shariq Khan in Bengaluru. Additional reporting by Trixie Yap in Singapore and Yuka Obayashi in Tokyo. Editing by David Gregorio and Matthew Lewis

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