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Oil remains near multi-month lows on demand concerns

Oil prices rose from multi-month lows on Monday, as persisting concerns about demand slowing due to a bleak economic outlook offset some upbeat economic news from China and the United States.

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London: Oil prices rose from multi-month lows on Monday as lingering worries about demand weakening on the back of a darkened economic outlook outweighed some positive economic data from China and the United States.

Brent crude futures were down 51 cents, or 0.5 percent, at $94.41 a barrel by 0816 GMT, erasing earlier gains. U.S. West Texas Intermediate crude was down 43 cents or 0.5 percent at $88.58 per barrel.

Front-month Brent prices dropped 13.7 percent last week, marking their worst weekly decline since April 2020, while WTI prices fell 9.7 percent as fears that a recession would reduce demand for oil weighed on prices. Front-month Brent prices have been declining since February.

“Last week’s price action left no doubt that recession-driven demand concerns have the upper hand over supply fears. One could even go as far as saying the war premium has evaporated,” PVM analyst Stephen Brennock said.

Following an unexpected acceleration in job growth in the world’s biggest oil consumer, the United States, in July, both contracts somewhat recovered their losses.

China also astonished the markets on Sunday with a faster-than-anticipated increase in exports.

China, the top crude importer in the world, imported 8.79 million barrels of crude per day (bpd) in July, up from a four-year low in June but still 9.5% less than a year earlier, according to customs data.

Before an approaching EU embargo that will go into force on December 5 began to flow, Russian crude and oil product exports to Europe.

Despite lower gas prices at the pump, demand for gasoline in the United States is still declining, and stocks are growing.

Energy companies last week decreased the number of oil rigs in the United States for the first time in ten weeks, cutting production by the most since September.

The passage of a massive $430 billion bill by the Senate on Sunday gave the American clean energy industry a boost.

 

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