Brent crude futures fell $1.68, or 2 percent, to $79.93 a barrel, while U.S. crude lost $1.78, or 2.3 percent, to $75.59. Both benchmarks hit their lowest since late July, according to Reuters news agency. Crude is trading below its levels before the war between Israel and Hamas, which has not affected supplies from the Middle East.
Back home, on the Multi Commodity Exchange (MCX), crude oil futures due for November 17 expiration last traded 2.81 percent lower at ₹6,324 per bbl, after swinging between ₹6,306 and ₹6,481 per bbl during the session so far, against an exit of ₹6,507 per barrel.
Also read: India’s oil demand rose 4% in October, jet fuel consumption hit 43-month high: S&P Global
What is weighing on crude oil prices?
-The EIA now expects total US petroleum consumption to fall by 300,000 barrels per day (bpd) this year, reversing its previous forecast of a 100,000 bpd increase. US crude oil stocks rose by nearly 12 million barrels last week, market sources said late Tuesday, according to figures from the American Petroleum Institute.
-Data from China, the world’s biggest crude oil importer, showed its total exports of goods and services contracted faster than expected, fueling concerns about the outlook for energy demand. In the eurozone, data showing falling retail sales reflected weak consumer demand and the prospect of a recession.
-Still, China’s October crude oil imports showed strong growth and its central bank governor said on Wednesday that the world’s second-largest economy is expected to meet its gross domestic product growth target this year. Beijing has set a growth target of around 5 percent.
-India’s oil demand is expected to grow by 258,000 bpd in 2023, revised higher by 9,000 bpd from S&P Global’s previous update on strong diesel sales. Total net oil import demand in 2023 is expected to be 7 percent over 2019, before rising to around 11 percent in 2024.
-Analysts from Goldman Sachs estimated that net marine oil exports from six countries from the Organization of the Petroleum Exporting Countries (OPEC) oil producer group will remain only 0.6 million bpd below April levels.
-OPEC announced cumulative production cuts amounting to 2 million bpd from April 2023. In more bullish news on crude prices, OPEC expects the global economy to grow and fuel demand to rise despite economic challenges including high inflation and interest rates.
Where are prices headed?
Analysts noted that crude oil prices retreated on Tuesday, falling below $78 a barrel to hit their lowest level since July, as concerns over a wider regional conflict stemming from the Israeli war -Hamas contradicting economic data from China that was weaker than expected.
China’s exports have fallen for six months in a row, as rising interest rates put downward pressure on global economic activity. A sharp decline in Chinese imports, which exacerbated concerns about oil demand, prompted a sharp sell-off in crude markets.
Crude oil prices also fell as the dollar index rebounded ahead of the Federal Reserve Chairman’s speech. Weakness in Asian and European markets, along with concerns about the recession in the Eurozone, weighed more heavily on crude oil prices.
“We expect continued volatility in the price of crude oil. Crude oil finds support at $76.30-$75.50, with resistance at $78.10-$78.80. In terms of INR, crude oil comes supported by ₹6,440- ₹6,350, while resistance lies at ₹6,575- ₹6,660,” said Rahul Kalantri, VP Commodities, Mehta Equities Ltd
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Updated: 08 November 2023, 10:16 PM IST
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