Oil prices turn around compared to the last few sessions and are down on fears that growth in crude oil demand will decline. But there are many factors that are driving a fall in black gold prices.
Meanwhile, the major economies suffer from inflation and supply chain problems, even as rising prices for power-generating fuels such as coal and natural gas have limited losses, while the dollar is appreciating significantly ahead of new moves by the central bank. Futures on Brent crude oil fell by 0.36% to 83.12 dollars a barrel, those on WTI lost 0.37% to 80.34.
Both contracts have reduced losses after falling as low as 70 cents earlier, when China, the world’s largest crude oil importer, released data showing September imports fell 15% from a year earlier.
However, China, along with Europe and India, remains in trouble due to the shortages of coal and natural gas that have pushed the prices of the fuels needed to generate electricity. And in fact, in the Asian giant, coal prices have shot up to record levels and have certainly not helped the recent floods in Shanxi province, the main coal producer.
In short, the supply has become even more limited, precisely at the time of Beijing’s new efforts to liberalize energy prices. In this scenario, analysts such as Howie Lee, of the Ocbc bank in Singapore, predict China will probably buy more crude in the coming months “because he tries to solve his energy crisis in any way possible and diesel can provide some relief”.
In addition to China, the new growth estimates of the International Monetary Fund, more pessimistic for the United States and other large economies in the wake of concerns that supply chain disruptions and cost pressures are holding back the post-pandemic global economic recovery.
Last but not least, the strong dollar, trading close to a year’s high, also weighed on oil prices, as makes crude oil more expensive for those holding other currencies. However, observers are still focused on the fact that the surge in gas and coal prices will lead to greater demand for petroleum products for energy production.
The market is also awaiting data on US oil stocks, which was delayed by a day after Monday’s Columbus Day holiday. Stocks of gasoline are estimated to have risen by about 100,000 barrels, while stocks of distillates, which include diesel, fuel oil and jet fuel, have fallen by about 1 million barrels. Today, OPEC is also expected to release its new report which will include the new estimates.