Oil Prices Struggle as U.S. and China Demand Wanes, Crude Stockpiles Build
Oil prices have fallen to their lowest levels in over three months due to concerns over decreasing demand in the top oil-consuming nations, the United States and China.
Brent crude futures rose by 15 cents to $81.76 a barrel on Wednesday, while U.S. crude futures dropped 2 cents to $77.35 a barrel. Both prices hit their lowest levels since July 24 on Tuesday.
The drop in prices is attributed to concerns about waning demand in the world’s largest oil consumers, as U.S. crude oil stocks reportedly rose by almost 12 million barrels last week, according to market sources citing American Petroleum Institute figures.
The U.S. Energy Information Administration (EIA) has announced that it will delay the release of weekly inventory data until the week of Nov. 13. In addition, the agency expects total petroleum consumption in the U.S. to fall by 300,000 barrels per day (bpd) this year, reversing its earlier forecast of a 100,000 bpd increase. This comes as U.S. crude oil production is expected to increase slightly less than previously anticipated.
The concerns about demand in the U.S. were echoed by data from China, the world’s biggest crude oil importer. While crude oil imports in October showed robust growth, China’s total exports of goods and services contracted at a faster pace than expected, raising worries about weakening global demand.
Furthermore, a modest recovery in the U.S. dollar from recent lows has added pressure on oil prices, making oil more expensive for holders of other currencies.
Despite these challenges, the oil-producing group OPEC remains optimistic about global economic growth driving fuel demand. Additionally, China’s central bank governor has expressed confidence in the country reaching its annual gross domestic product growth target this year.
Overall, the combination of rising crude stockpiles in the U.S. and concerns over weakening demand in China has led to a struggle in oil prices, as investors monitor supply and demand dynamics in the world’s largest oil markets.