2023-11-10T05:40:07+00:00
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/ Oil prices are heading for the third weekly decline in a row due to growing demand concerns and a decline in the war risk premium, with Saudi Arabia blaming speculators as the reason for this decline.
West Texas Intermediate crude settled near $76 a barrel on Friday, and fell nearly 6% during the week. Prices rose on Thursday after comments by Saudi Energy Minister Prince Abdulaziz bin Salman were similar to his criticism of speculators in May, weeks before the kingdom cut production.
Brent crude fell by more than 13% over the past three weeks due to signs of falling demand from China, the United States and Europe, while flows from the Middle East remained unaffected by the war between Israel and Hamas. Hedge fund manager Pierre Andurand also pointed to higher-than-expected supplies, pointing to higher production in the United States and Iran, as a catalyst for the recent decline.
A sharp reversal in price action
The current price represents a sharp reversal from late September, when Brent approached $100 a barrel and the Organization of the Petroleum Exporting Countries expected an unprecedented decline in inventories amid record demand for fuel and Saudi cuts. For now, attention has turned to the slowdown in China’s refining sector and stubbornly high interest rates in the United States.
Diesel – the main fuel that fuels the economy – has become the latest factor to negatively impact oil prices, with US futures falling by about 8% this week. This decline is reflected in Europe, where a decline in industrial and economic activity in Germany, France and Spain has led to a sharp decline in fuel consumption.
The rapid deterioration in sentiment has caused the rapid WTI spread to shift into a “backorder” state, where near-term prices are lower than long-term prices, for the first time since July. This shift comes as US production rises to a record level, and stocks in the country’s largest storage center decline to very low levels.
Bloomberg