Oil prices experiences decline
Date
10/2/2024 8:15:58 AM
(MENAFN) On Tuesday, oil prices experienced a decline as the market reacted to increasing global supply prospects and worries about slowing demand growth, even in the face of ongoing conflicts in the Middle East—home to a significant portion of the world's oil reserves. The international benchmark brent crude saw a decrease of 1.38 percent, trading at USD70.71 per barrel as of 11:20 a.m. local time (08:20 GMT), down from the previous session's close of USD71.70. Similarly, the US benchmark West Texas Intermediate (WTI) dropped by 1.55 percent, settling at USD67.11 per barrel after closing at USD68.17 in the prior trading session.
Initially, both benchmarks had risen following Israel's escalation of attacks on Hezbollah in Lebanon, raising fears that the conflict might disrupt crude supply across the region. Market participants are closely monitoring whether the tensions in the Middle East will expand to affect broader geopolitical stability.
However, these supply disruption fears are being counterbalanced by the likelihood of increased production from the Organization of Petroleum Exporting Countries (OPEC) and its allies, collectively known as OPEC+. According to commodity strategist Daniel Hynes from the Australia and New Zealand Banking Group, OPEC+ has been implementing significant output cuts since late 2022, currently reducing supply by approximately 5.8 million barrels per day. Despite these measures aimed at stabilizing the oil market, prices have continued to face downward pressure, prompting questions about whether the group will sustain its current production restrictions.
Adding to the bearish sentiment, uncertainties surrounding demand from China—the world's largest crude importer—have further contributed to the decline in oil prices. Recent data showed that China's manufacturing activity contracted for the fifth consecutive month in September, raising concerns about the potential impact on crude consumption.
As the market grapples with these complex dynamics, traders and analysts will be keeping a close eye on developments in both the geopolitical landscape of the Middle East and the economic indicators from China, which could significantly influence future oil price movements.
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