Oil headed for 4th weekly loss after sinking 5% on demand concerns; Brent at $78/bbl on week-long selloff | Mint
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Business News/ Markets / Commodities/  Oil headed for 4th weekly loss after sinking 5% on demand concerns; Brent at $78/bbl on week-long selloff
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Oil headed for 4th weekly loss after sinking 5% on demand concerns; Brent at $78/bbl on week-long selloff

Both crude oil benchmarks have lost around a sixth of their value over the last four weeks, and are on track for their fourth straight week of losses.

FILE PHOTO: A view shows oil pump jacks outside Almetyevsk in the Republic of Tatarstan, Russia June 4, 2023. REUTERS/Alexander Manzyuk/File Photo (REUTERS)Premium
FILE PHOTO: A view shows oil pump jacks outside Almetyevsk in the Republic of Tatarstan, Russia June 4, 2023. REUTERS/Alexander Manzyuk/File Photo (REUTERS)

Global oil benchmarks headed for their fourth weekly loss on Friday, November 17, but recouped some losses a day after sinking 5 per cent to a four month-low on growing worries about rising supply and cooling demand.

Brent futures rose $1.34, or about 1.7 per cent, to $78.76 a barrel. US West Texas Intermediate crude (WTI) was at $74.1, up $1.2, also roughly 1.7 per cent. Both benchmarks have lost around a sixth of their value over the last four weeks, and are on track for their fourth straight week of losses, according to news agency Reuters.

Back home, on the Multi Commodity Exchange (MCX), crude oil futures due for a November 17 expiry, was last trading higher by 3.75 per cent at 6,252 per bbl, having swung between 6,070 and 6,261 per bbl during the session so far, against a previous close of 6,026 per barrel.

What's weighing on crude oil?

-Oil's decline this week was mainly triggered by a steep rise in US crude inventories and production sustaining at record levels, while signs of thawing demand in China also triggered concerns.

Also Read: Saudi Arabia likely to extend additional oil supply cuts beyond December 2023: Report

-With Brent below $80 a barrel, a barrage of analysts now expect the Organisation of Petroleum Exporting Countries and its allies (OPEC+), principally Saudi Arabia and Russia, to extend their voluntary cuts into 2024.

-Another factor contributing to negative sentiment was the number of Americans filing new claims for unemployment benefits increasing, and a slight contraction in industrial production figures.

-"Oil prices are down slightly this year despite demand exceeding our optimistic expectations," Goldman Sachs analysts said in a note. "Non-core OPEC supply has been much stronger than expected, partly offset by OPEC cuts."

-World's top exporter Saudi Arabia is expected to extend its additional voluntary supply cuts to at least the first quarter, if not the first half of 2024, Amrita Sen, co-founder of consultancy Energy Aspects said on Wednesday.

-For 2023, the US, which makes up two-thirds of non-OPEC growth, is forecast to deliver annual gains of 1.4 million barrels per day (bpd) – boosting production to a fresh annual high, the International Energy Agency (IEA) said in its latest report.

-But the drop in oil prices on Thursday had some analysts questioning whether the selloff was overdone, particularly in light of escalating tensions in the Middle East that could disrupt oil supplies and the US vowing to enforce sanctions against Hamas-backer Iran.

Where are prices headed?

Crude oil futures experienced a decline of up to 5 per cent driven by diminishing concerns of a supply squeeze amidst growing inventories and apprehensions about a global economic slowdown. In the past month, WTI crude oil has witnessed a decrease exceeding 14 per cent, according to analysts.

‘’A positive adjustment in global oil demand forecasts by OPEC+ and the IEA may provide some support to prices at these reduced levels. Anticipating ongoing volatility, crude oil finds support in the range of $72.30–71.50, with resistance at $73.90-74.50. In terms of INR, crude oil has support at 5,940-5,850 and resistance at 6,135-6,190,'' said Rahul Kalantri, VP Commodities, Mehta Equities Ltd.

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Published: 17 Nov 2023, 10:22 PM IST
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