Oil Prices Slip on US Crude Build and China Demand Worries

November 16, 2023, 08.29 PM | Source: Reuters
Oil Prices Slip on US Crude Build and China Demand Worries

ILUSTRASI. Oil prices edged lower on Thursday, extending losses from the previous session.


OIL PRICE - NEW YORK. Oil prices edged lower on Thursday, extending losses from the previous session as signals of higher supply from the United States met concern over lacklustre energy demand from China.

Brent futures were down 70 cents at $80.48 a barrel by 1250 GMT. U.S. West Texas Intermediate crude (WTI) shed 65 cents to $76.01. Both benchmarks fell more than 1.5% in the previous session.

WTI's front-month contract also traded below the price for the second month, a structure known as contango, suggesting that investors expect prices to increase. The front month's discount to the second month traded at minus 17 cents on Thursday.

"Clearly, the decline in crude oil prices and the weakening of the structure is an ominous sign; one that implies an oversupplied physical market," said Tamas Varga of oil broker PVM.

Worries have been amplified by the U.S. crude stocks that the U.S. Energy Information Administration (EIA) said rose by 3.6 million barrels last week to 421.9 million barrels, far exceeding analysts' expectations in a Reuters poll.

U.S. crude production held steady at a record 13.2 million barrels per day (bpd).

Read Also: Philippines Central Bank Keeps Benchmark Rate Steady at 6.5%

Varga said the fall in crude prices flies in the face of recent estimates of global demand-supply fundamentals from OPEC and the International Energy Agency (IEA), both of which predicted supply tightness in the fourth quarter.

Meanwhile, October inflation data from major economic hubs including the euro zone, the United States and the UK have also been encouraging, he added.

Even China, where the property sector remains in trouble, is seeing green shoots of economic recovery. Its economic activity perked up in October as industrial output increased at a faster pace and retail sales growth beat expectations.

"The current price drop is taking place amid a seemingly auspicious backdrop, which suggests that investors simply do not buy into the ‘Q4 stock draw’ narrative; something that is not backed up by the recent weekly EIA reports either," said Varga.

One of the factors likely to be spooking investors is an expected slowdown in Chinese oil refinery throughput. Runs eased in October from the previous month's highs as industrial fuel demand weakened and refining margins narrowed.

In the Middle East, with the Israel-Hamas conflict appearing to be escalating in Gaza, U.S. officials on Wednesday vowed to enforce oil sanctions against Iran, which has long been a backer of Hamas.

Editor: Wahyu T.Rahmawati

Latest News