Oil sinks into bear market as robust supply pressures Opec+
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US crude traded near US$73 a barrel on Nov 17, after dropping more than 20 per cent from a high in September.
PHOTO: REUTERS
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SYDNEY – Oil headed for a fourth weekly loss after sinking into a bear market as signs of healthy supplies and rising stockpiles offset attempts by Opec+ leaders Saudi Arabia and Russia to keep declines in check.
West Texas Intermediate (WTI) traded near US$73 a barrel on Friday after dropping more than 20 per cent from a high in September.
Global benchmark Brent was up 0.1 per cent to US$77.52 after plunging almost 5 per cent on Thursday.
The declines followed a build in US crude inventories, and were likely amplified by automated selling programs.
Crude’s run of four straight weekly declines – the longest losing streak since May – has come despite collective and voluntary supply cuts by the Organisation of Petroleum Exporting Countries and its allies.
The losses have also been abetted by the evaporation of an Israel-Hamas war risk premium, as fears the conflict would expand and disrupt oil supplies have so far not eventuated.
The International Energy Agency said earlier this week that production growth means the global market will not be as tight as had been expected in this quarter, adding pressure on Opec+ ahead of a meeting on its supply policy on Nov 26.
“We believe that Opec will ensure that Brent oil prices end up in a US$80 to US$100 range in 2024 by ensuring a moderate deficit and leveraging its pricing power,” Goldman Sachs analysts said in a note.
The latest sell-off was driven by non-Opec supply topping expectations, they said.
Mid-week data showed nationwide US crude stockpiles expanded for a fourth week to hit the highest level since August.
Some of that increase came at the key hub in Cushing, Oklahoma, where holdings expanded by more than 8 per cent.
There have also been some clouds on the demand horizon. Figures from China, the world’s largest importer of crude, showed that refiners cut daily processing rates in October as apparent oil demand fell from a month earlier.
Meanwhile, US unemployment benefits rose to the highest level in almost two years, signalling a slowdown in the world’s biggest crude consumer.
“The string of weak macro data, coupled with rising US crude stockpiles, triggered the sell-down in oil,” said Standard Chartered investment strategist Han Zhong Liang.
WTI prices are likely to be sluggish on the back of a slowing global economy, he added. BLOOMBERG
