Oil Updates – prices sputter near 3-month lows as demand concerns mount

Jeddah - Yasmine El Tohamy - LONDON: Oil prices struggled on Wednesday after sliding to their lowest levels in over three months in the previous session, weighed down by concerns over waning demand in the world’s top oil consumers, the US and China.

Brent crude futures advanced by 15 cents to $81.76 a barrel by 9:36 a.m. Saudi time, while US crude futures dipped 2 cents to $77.35 a barrel. Both declined to the lowest since July 24 on Tuesday.

“The market is clearly less concerned about the potential for Middle Eastern supply disruptions and is instead focused on an easing in the balance,” said Warren Patterson and Ewa Manthey, analysts from ING bank, in a note to clients, referring to an easing in tight oil supply conditions.

US crude oil stocks rose by almost 12 million barrels last week, market sources said late on Tuesday, citing American Petroleum Institute figures.

The US Energy Information Administration will delay the release of weekly inventory data until the week of Nov. 13.

Crude oil production in the US this year will rise by slightly less than previously expected while demand will fall, the EIA said on Tuesday.

The EIA now expects total petroleum consumption in the country to fall by 300,000 barrels per day this year, reversing its earlier forecast of a 100,000 bpd increase.

The agency also forecast Venezuela’s crude oil production will increase by less than 200,000 bpd to an average of 900,000 bpd by the end of 2024 under easing of US sanctions.

Further tempering supply tightness concerns, analysts from Goldman Sachs estimated seaborne net oil exports by six members of the Organization of the Petroleum Exporting Countries, which announced cumulative production cuts worth 2 million bpd since April 2023, remain at only 0.6 million bpd below April levels.

Data in China, the world’s biggest crude oil importer, has also raised doubts about the demand outlook.

Crude oil imports by the world’s second-biggest economy in October showed robust growth but China’s total exports of goods and services contracted at a quicker pace than expected, adding to fears of weakening global demand.

Adding to pressure on oil prices was a modest recovery in the US dollar from recent lows, which makes oil more expensive for holders of other currencies.

On the brighter side, OPEC expects the global economy to grow and drive fuel demand, despite economic challenges, including high inflation and interest rates.

Meanwhile, China is expected to hit its annual gross domestic product growth target this year, the country’s central bank governor said on Wednesday. Beijing has set an economic growth target of around 5 percent for this year.