Following a Friday surge, oil prices retreated on Monday as fresh worries about slowing demand in China and the US soured investor mood.
At 0400 GMT, the January contract for Brent oil was down 71 cents, or 0.87%, at $80.72 a barrel, while the December contract for U.S. West Texas Intermediate (WTI) crude was down 68 cents, or 0.88%, at $76.49.
The 100-day moving average of $86.61 per barrel for WTI and $82.31 per barrel for Brent was much higher than both benchmarks.
As Iraq expressed support for OPEC+ oil reduction last Friday, prices climbed about 2%. However, they lost around 4% for the week, recording their third weekly loss for the first time since May.
According to Hiroyuki Kikukawa, head of NS Trading, a division of Nissan Securities, “investors are more focused on slow demand in the United States and China while worries over the potential supply disruptions from the Israel-Hamas conflict have somewhat receded.”
Last week, the U.S. Energy Information Administration (EIA) said that while consumption will decline, crude oil output in the country would increase this year by a little less than anticipated.
According to the report, per capita petrol usage in the United States may reach its lowest point in 20 years next year.
The world’s largest importer of crude oil, China, released weak economic statistics last week, which added to concerns about the decline in demand.
October saw consumer prices in China drop to levels not seen since the epidemic, raising concerns about the durability of the nation’s economic recovery.
Furthermore, China’s refiners requested reduced supplies for December from Saudi Arabia, the biggest exporter in the world.
Nevertheless, Kikukawa stated that if WTI hits $75 per barrel, oil prices will be sustained.
We foresee support purchasing if the market declines further, as it is expected that Saudi Arabia and Russia would opt to extend their voluntary supply cutbacks after December, according to Kikukawa.
Leading oil exporters Saudi Arabia and Russia said last week that they will keep reducing their voluntary oil output until the end of the year because to worries about demand and economic expansion, which is keeping the price of crude oil down.
On November 26, the Organisation of the Petroleum Exporting Countries (OPEC+) and its allies, which includes Russia, will convene.
According to energy services company Baker Hughes, U.S. energy companies reduced the number of oil rigs in operation for a second consecutive week, bringing it to its lowest level since January 2022.