Crude oil prices started the new week with losses, with a renewed focus on demand in China and the United States weighing on benchmarks.
In morning Asian trade, both Brent and West Texas Intermediate were down close to 1% on news that US gasoline demand may fall to a two-decade low next year and that Chinese refiners requested lower quantities of Saudi crude for December, as reported by Reuters. At 12:00 Greek time, the prices have corrected, but they are still moving even marginally down to 77.05 dollars per barrel for WTI and 81.28 for Brent.
The USA
While U.S. gasoline demand forecasts may indeed favor a more bearish path for oil, the reason Chinese refiners requested lower volumes of Saudi oil does not necessarily indicate lower demand for the fuel. What it certainly shows is that refineries have used up their fuel export quotas, according to the Oilprice website.
China and the Middle East
Some new economic data from China also contributed to the downward trend in oil prices. Consumer prices for October fell, pointing to weaker demand in the country and fueling concerns that the economy is growing more slowly and unevenly than expected.
Meanwhile, fears of a supply cut in the Middle East have largely subsided, even after Iran warned last week that an escalation of the conflict between Israel and Hamas was inevitable.
Reduced demand
“Investors are more focused on subdued demand in the United States and China, while concerns about potential supply disruptions from the Israel-Hamas conflict have somewhat subsided,” a senior analyst at Nissan Securities told Reuters.
“We think the scale of the sell-off in oil is overdone given that fundamentals remain tight, at least in the short term,” ING analysts Warren Patterson and Ewa Manthey wrote in a note on Friday.
“However, fundamentals are not as bullish as initially expected, with Russian oil exports rising while refining margins have also weakened,” they added.
Source: ifimerida
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