FX168 Financial News Agency (North America) News: Oil prices fell more than 2% on Wednesday to the lowest level in more than three months due to concerns about weakening demand for crude oil in various countries.
U.S. crude oil fell by $2.04/barrel to close at $75.33/barrel, a decrease of 2.6%.
(U.S. West Texas Intermediate (WTI) crude oil futures trend chart, source: FX168)
The settlement price of Brent crude oil futures fell by US$2.07/barrel to close at US$79.54/barrel, a decrease of 2.5%.
(Brent crude oil futures trend chart, source: FX168)
[Market News Analysis]
Oil prices reversed gains and U.S. inflation may show encouraging signs. Financial website Forexlive said it is too early to predict next week’s CPI data in the United States. But as oil prices reverse gains since the Middle East conflict, so should CPI. The recent drop in oil prices should have a serious impact on November’s CPI. It is not impossible that the monthly CPI rate in October and November both recorded 0.1%. In addition, the annual CPI rate in October may be lower than 3.5%. There is a good chance we will see U.S. inflation below 3% within 3 months. That’s obviously good news, but the Fed is more focused on core inflation, especially core services inflation. The best signal may come from the bond market, with the U.S. 10-year Treasury yield falling back to 4.51%. Demand at today’s auction has been decent, suggesting real money is keeping pace with lower interest rates and may be feeling lower inflation.
“The crude oil supply market is clearly less concerned about the possibility of supply disruptions in the Middle East and is instead focused on easing the balance,” ING analysts Warren Patterson and Ewa Manthey said in a note to clients.
U.S. crude inventories rose by nearly 12 million barrels last week, market sources said late Tuesday, citing data from the American Petroleum Institute, also weighing on oil prices. If confirmed, this would be the largest increase since February. However, the U.S. Energy Information Administration (EIA) has postponed the release of weekly oil inventory data to November 15.
U.S. crude oil production will be slightly lower than expected this year, but oil consumption will fall by 300,000 barrels per day, the EIA said on Tuesday, reversing its previous forecast of a 100,000 barrel per day increase.
Weak demand worries investors. Brent crude fell below $80 a barrel for the first time in more than three months as a weak fuel demand outlook overshadowed concerns that a crisis in the Middle East could lead to supply disruptions. During the Palestinian-Israeli conflict, oil prices once soared to over $90/barrel. But now that supplies from the Persian Gulf have so far been unaffected by the conflict, attention has turned to macroeconomic deterioration and weak oil fundamentals, with neither the U.S. nor Europe looking optimistic. Data from China, the world’s largest crude importer, showed its total exports of goods and services shrank faster than expected, adding to concerns about the outlook for energy demand.
Many institutions said that due to the rapid changes in gold prices, the short-term risks of enterprises in related industries have increased rapidly. Based on risk management needs, futures + options tools can be considered to protect profits. Wang Ying, a researcher at the Investment Consulting Department of Zhongyan Futures, told a reporter from Securities Daily that the decline in international oil prices was mainly caused by overseas economic recovery being less than expected. For example, in the past two months, the U.S. unemployment rate has exceeded expectations and the new orders index has accelerated in contraction. At the same time, there are no signs of tightening on the supply side. “In the long term, the supply and demand pattern is relatively loose, but in the short term there may be production cuts on the supply side, and there may be some support for prices.”
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The Bank of Canada said in meeting minutes released today that the Palestinian-Israeli conflict has increased the risk that oil prices may remain high or rise further.
[Focus on financial data and events in the next trading day (Beijing time)]
① 07:50 Japan’s September trade account
② 07:50 The Bank of Japan releases a summary of the review committee’s opinions
③ 09:30 China’s October CPI annual rate
④ 16:35 Bank of Japan Governor Kazuo Ueda was interviewed
⑤ 21:30 Number of initial jobless claims in the United States for the week ending November 4
⑥ 22:30 Fed Bostic and Barkin delivered speeches
⑦ Barkin of the Federal Reserve gave a speech at 00:00 the next day
⑧ At 01:30 the next day, European Central Bank President Lagarde delivered a speech
⑨ At 03:00 the next day, Fed Chairman Powell delivered a speech