2023-08-21 21:24:20
Oil prices fell on signs of a possible oversupply and concerns that China’s economic growth is slowing.
WTI futures fell below $81 a barrel, following trading in a range of nearly $2 on Monday.
The movement of oil prices varied with the movement of prices in the markets in general, following Archyde.com published a report on the plans of the Iraqi Oil Minister to discuss the resumption of oil exports through the port of Ceyhan in Turkey.
Adding to the bearish trend is the rise in monthly oil exports from Iran, which is causing a sharp rise in global crude flows at a time when other producing countries are cutting production.
Investors also continue to watch the economic woes in China which contributed to the recent declines. Chinese banks cut their benchmark lending rate less than expected on Monday, even though the central bank is pressuring lenders to increase loans.
“We will continue to test the $80 level to the downside for WTI until interest rates take a break or we get strong economic stimulus,” said Rebekah Babin, senior energy trader at CIBC Private Wealth. “From China, investors are evaluating the lack of supply in the market well at this point as evidenced by the spreads. Currently, macro factors are back in the driver’s seat, interest rates and economic conditions in China are the driving force in the markets.”
However, the market continues to show signs of strength, as the cluster of near-term futures contracts on the oil curve point to tight supplies amid production cuts by Russia and Saudi Arabia.
Meanwhile, refined products such as diesel – the fuel on which the global economy relies – have begun to bet on scarcity this winter, increasing their premium over the oil they are made from. Gasoline futures in New York are up regarding 13% this year, outpacing the increase in crude oil prices.
Also read: Diesel prices suggest a scarcity of supply in the winter
The annual Jackson Hole Symposium in Wyoming, which features speakers including Federal Reserve Chairman Jerome Powell, may provide clues to the direction of US interest rates.
Low crude oil trading volumes have exacerbated volatility, with overall liquidity hovering near its lowest levels this year as investors travel for holidays.
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