Oil hit over three-month low on supply increase
2023-11-08
Summary:
Oil prices fell to a 3-month low, down over 4%, due to rising OPEC exports and a murky demand outlook, prompting market concerns.
Oil prices slid to their lowest in over three months on Wednesday. They fell more than 4% the previous session on rising OPEC exports and clouded demand outlook.
OPEC crude exports are up by about 1 million bpd since their August low, as a result of seasonally lower domestic demand in the Middle East.
None-OPEC are also increasing output. 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.
Saudi Arabia’s production cuts have backfired. The kingdom’s oil sector contracted by 17.3% in the third quarter from a year earlier and its economy shrank 4.5% in the period, according to CNN.
The premium on front-month loading Brent contracts over ones loading in six months was at a 2.5- month low, indicating easing concerns about supply deficit.
On the demand side, China's crude oil imports last month showed robust growth but its total exports contracted faster than expected. Investors are waiting for recent policy support to play out.
The lower lows and lower high pattern for Brent crude indicates that sellers are dominating at the moment. Major technical indicators suggest more pain in the short-term.
Disclaimer: This material is for general information purposes only and is not intended as (and should not be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by EBC or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person.
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