The oil price has experienced its third trading day of decline, with signs that the tense situation in the crude oil market has eased, and the Palestinian-Israeli conflict is expected to be temporarily contained under the negotiation of multiple countries.
WTI December crude oil futures closed down $1.75, or 2.05%, at $83.74 per barrel. At one point in the day, they fell 3.62% to $82.92 per barrel, a new low in nearly a week and a half.
Brent crude oil futures closed at 88.07, a decrease of 1.96%.
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Rebecca Babin, a senior energy trader at CIBC Private Wealth, said: "Crude oil is facing triple resistance today." "Political risks are mildly easing, physical indicators are weakening, and the US dollar is rising. The recent long market trend is largely driven by retail buying, which is often short-term, event driven traders
The Middle East region is the source of about one-third of global crude oil, and as there have been no direct supply disruptions in the region, it has eroded most of the premium in crude oil prices caused by war risks.
Ecopetrol, Colombia's national oil company, stated that its goal is to increase oil production to 730000 barrels per day.
US National Security Council spokesperson Kirby stated that the United States will continue to work with partners in the region to provide fuel to Gaza. Understand Israel's concerns about the possible diversion of fuel aid by Hamas.
A series of slow economic data released by Germany, the eurozone, and the UK have dampened the outlook for energy demand, Mizuho analyst Robert Yawger said, "There must be a conversation about how the global economy is worse this week than last week." Yoger added, "Today many top bankers and financial experts are in Saudi Arabia discussing how bad the economy is, which is of no use." He referred to the future investment initiative known as "Davos in the Desert.
Unlike Europe, data from the United States shows that as the manufacturing industry emerged from a five month contraction, corporate output slightly increased in October. The relative strength of the US economy has helped boost the US dollar, making oil denominated in US dollars more expensive for other currency holders.
John Kilduff, a partner at Again Capital, stated that "despite concerns about the Middle East war and Saudi Arabia's efforts to tighten supply, demand has been the main resistance for some time." At the same time, Kilduff and Yog stated that the strengthening of diplomatic efforts has also eliminated the risk premium, leading to Brent crude oil prices rising to their highest level in a month on Friday.
However, the weekly storage report from the American Petroleum Institute shows a significant decrease in crude oil and fuel inventories last week, indicating strong demand in the country.
The weekly inventory report of the American Petroleum Institute (API) shows a decrease in inventory of gasoline and diesel, the main fuel products in the United States, and distillate oil, the raw material for heating fuels. Usually at this time of year, the demand for fuel in the United States weakens as fewer and fewer families bring their children back to school or university. However, due to seasonal maintenance being carried out in the refining industry, it is common for fuel inventory to decline more than usual, resulting in limited replenishment. Despite a significant decline in crude oil production, API still notes that the production of the Cushing Storage Center in Oklahoma is 513000 barrels, which is the delivery point for West Texas Intermediate crude oil futures traded on the New York Mercantile Exchange. Cushing's storage levels have significantly decreased this year, sparking concerns that they may reach such critical lows, making storage center operations more complex. Last week, the storage center had a net outflow of 1.05 million barrels.
In terms of fuel, Petroleum Trading Group reported a decrease of 41.69 million barrels in gasoline inventory and 2.313 million barrels in distillate oil inventory. Last week, there was a shortage of 1.578 million barrels of gasoline, while distillate oil decreased by 612000 barrels.
On Tuesday, the International Energy Agency stated that according to current policies of governments, fossil fuel demand is expected to peak by 2030.
UBS economists report that, The intensification of political risks highlights the advantages of diversification. Oil and gold assets will also be supported by market fundamentals, reflecting concerns that the broader Middle East conflict may disrupt oil supply. In the case of oil, the risk of supply disruptions from the Middle East conflict arises at a time when global markets are already tense. Global demand continues to grow, and OPEC+oil exporting countries have been restricting supply
Focus on financial data and events on Wednesday (Beijing time)
① 08:30 Australia's third quarter CPI annual rate, and Australia's September unadjusted CPI annual rate
② 16:00 German October IFO Business Climate Index, Swiss October ZEW Investor Confidence Index
③ 22:00 Annualized total sales of new homes in the United States in September, Bank of Canada announces interest rate resolution
④ 22:30 EIA crude oil inventory for the week from the United States to October 20th, Cushing crude oil inventory for the week from the United States to October 20th, and Strategic Petroleum Reserve inventory for the week from the United States to October 20th
⑤ 23:00 Bank of Canada Governor and Vice Governor hold a press conference
⑥ At 01:00 the next day, European Central Bank President Lagarde delivered a speech
⑦ The next day at 04:35, Federal Reserve Chairman Powell delivered a speech at the lecture
