- US crude oil stocks surged by almost 12 million barrels last week.
- There was a faster-than-expected contraction in total exports of goods and services in China.
- China saw a robust growth in crude oil imports in October.
On Wednesday, oil prices dropped over 2%, reaching their lowest point in over three months due to concerns about decreasing demand in the US and China. According to American Petroleum Institute figures, US crude oil stocks surged by almost 12 million barrels last week. If confirmed, this would be the largest build since February.
The EIA stated that US crude production will increase slightly less than expected this year. At the same time, petroleum consumption will likely fall by 300,000 barrels per day (bpd), reversing the previous forecast of a 100,000 bpd increase.
Moreover, Phil Flynn, an analyst at Price Futures Group, said that oil collapsed due to global economic concerns based on China’s data and confidence that the Israel-Gaza conflict would not impact oil supply.
Data from China, the world’s top crude oil importer, revealed a faster contraction in total exports of goods and services than anticipated, raising concerns about the energy demand outlook. Zhou Hao from Guotai Junan International expressed concerns about market confidence. The poor export data contradicted expectations of export supply chain recovery.
In the Eurozone, falling retail sales data underscored weak consumer demand and the potential for a recession.
Meanwhile, Russia, part of the OPEC+ group, is considering lifting an export ban on specific gasoline grades. According to Energy Minister Nikolai Shulginov, the lift is meant to address domestic price and shortage issues.
However, China recorded robust growth in crude oil imports in October. Moreover, its central bank governor’s reassurances about achieving the 5% gross domestic product growth target for the year provided positive signals.
On Tuesday, data revealed that China increased its crude oil imports in October by 13.52% compared to last year. Domestic fuel demand increased during the Golden Week holiday.
Elsewhere, Barclays adjusted its 2024 Brent crude price forecast on Wednesday, reducing it by $4 to $93 per barrel. The revision was due to the resilient US oil supply. Additionally, there is increased output from Venezuela following the relaxation of sanctions on the Latin American producer in October. The lifting of sanctions on Venezuela’s oil sector contributed additional supplies to a market already strained by OPEC+ production cuts.