2023-10-05 12:02:00
International oil prices continued to fall sharply on Thursday (5th) due to concerns that slowing global economic growth will erode oil consumption.global benchmarkBrent crude oilIt fell below the US$85 per barrel mark for the first time since the end of August this year, while West Texas crude oil futures fell below the US$84 per barrel mark yesterday, the biggest drop since the end of September last year, and continued to fall on Thursday.
Deadline, due in DecemberBrent crude oilFutures fell 1.55% to $84.49 a barrel; West Texas crude oil futures expiring in November fell 1.72% to $82.77 a barrel.
The plunge in crude oil prices came following U.S. data showed a surge in U.S. gasoline inventories and falling demand, causing gasoline prices to plummet. It is worth noting that international oil prices both fell below key technical levels yesterday.Brent crude oiland WTI fell below their 50-day moving average for the first time since July last year.
Analysts pointed out that following a strong rebound in the third quarter (West Texas crude oil prices were close to US$95 per barrel at the end of September), the upward trend in crude oil prices has weakened. While rising oil prices have fueled speculation of a return to $100 a barrel, others remain skeptical, with prominent bearer Citigroup arguing that prices will reverse as the market returns to oversupply.
The sharp fall in oil prices comes amid growing concerns regarding rising interest rates and the global economy, which have hit both the stock and bond markets in recent weeks. If sustained, that would help cool inflationary pressures as central bankers including the Federal Reserve debate whether interest rates are high enough. The non-farm payrolls report on Friday (6th) will attract much attention and will provide clues regarding the health of the economy.
“Current interest rates combined with a stronger dollar will only create stronger headwinds for the market,” said Warren Patterson, head of commodity strategy at ING.
On the other hand, crude oil prices fell sharply despite announcements from Saudi Arabia and Russia that voluntary production cuts would last until the end of the year. In addition, the Joint Ministerial Monitoring Committee (JMMC) of the Organization of the Petroleum Exporting Countries and Partner Countries (OPEC+) does not recommend changes to the current production policy.
Multiple Citi analysts said in a report that as the bond market has been sending signals of economic weakness and U.S. gasoline demand continues to be sluggish, the rebound in oil prices has been reversed, and this plunge may allow OPEC+ to decide to stick to the production cut plan until the end of this year.
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