Oil prices slid more than $1 on Wednesday to their lowest in more than three months on concern over waning demand in the United States and China.
Brent crude futures fell $1.11 to $80.50 a barrel by 1311 GMT and U.S. crude lost $1.20 to $76.17, with both benchmarks registering their lowest levels since late July.
“The market is clearly less concerned about the potential for Middle Eastern supply disruptions and is instead focused on an easing in the balance,” ING analysts Warren Patterson and Ewa Manthey said in a note to clients, referring to tight crude supply conditions.
Crude oil production in the United States this year will rise by slightly less than previously expected but demand will fall, the U.S. Energy Information Administration (EIA) said on Tuesday.
The EIA now expects total U.S. petroleum consumption to fall by 300,000 barrels per day (bpd) this year, reversing its previous forecast of a 100,000 bpd increase.
Oil prices fall on demand concerns
U.S. crude oil stocks rose by almost 12 million barrels last week, market sources said late on Tuesday, citing American Petroleum Institute figures.
The EIA will delay the release of weekly inventory data until the week of Nov. 13.
Adding to fears of weakening global demand, data from China, the world’s biggest crude oil importer, showed its total exports of goods and services contracted more quickly than expected.
That reflects “a struggling domestic and global economy, which adversely affects the oil balance”, said Tamas Varga of oil broker PVM.
In the euro zone, data showing falling retail sales also highlighted weak consumer demand and the prospect of recession.
However, China’s October crude oil imports showed robust growth and its central bank governor said on Wednesday that the world’s second-biggest economy is expected to hit its gross domestic product growth target this year. Beijing has set a target of about 5% growth this year.
Tempering supply concerns, analysts from Goldman Sachs estimated seaborne net oil exports by six countries from oil producer group OPEC will remain only 0.6 million bpd below April levels. OPEC has announced cumulative production cuts amounting to 2 million bpd since April 2023.
In more bullish news for crude prices, OPEC expects the global economy to grow and drive fuel demand despite economic challenges including high inflation and interest rates.
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