Brent falls further as weak demand growth projections counter supply concerns
The front-month ICE Brent contract has declined by $1.81/bbl on the day, to trade at $88.25/bbl at 09.00 GMT.
PHOTO: Getty Images
Upward pressure:
Brent futures drew some support after China’s top legislators issued an additional quota of government bonds worth RMB 1 trillion ($137 billion) to support the country’s infrastructure. “This decision suggests a commitment to supporting economic growth and addressing fiscal challenges at various levels of government,” said SPI Asset Management’s managing partner Stephen Innes.
Meanwhile, US commercial crude inventories declined by 2.67 million bbls in the week ended 20 October, according to the American Petroleum Institute (API) data cited by Trading Economics. Market analysts expected a drop of 1.55 million bbls.
The API figures suggested that “strong exports were again influencing inventories and could provide some support,” Innes added.
The broadly followed US government data on crude oil stockpiles from the US Energy Information Administration (EIA) is due later today.
Downward pressure:
Despite growing tensions in the Middle East amid the ongoing Israel-Hamas conflict, the flow of oil supply in the region has remained uninterrupted.
Israel has held off its ground invasion of the Gaza Strip to retrieve hostages being held by Hamas. This has put off the “imminent risk to oil supply,” commented Price Futures Group’s senior market analyst Phil Flynn.
“Israel might be rethinking the scope of a ground invasion in the Gaza Strip, but the crux of the matter is that there has been no interruption in the Middle East's oil supply,” Innes added.
Meanwhile, the International Energy Agency (IEA) has reiterated its stance that global fossil fuels demand will peak by 2030 as the world turns towards cleaner energy.
With oil demand trading lower and key energy agencies projecting a demand peak by 2030, Brent futures' rally towards $95/bbl will be in peril, analysts said.
By Aparupa Mazumder
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