Brent declines as demand fears resurge
The front-month ICE Brent contract has plunged by $1.67/bbl on the day, to trade at $74.49/bbl at 09.00 GMT.
PHOTO: An oil barrel with a downward arrow indicating today's price decline. Getty Images
Upward pressure:
Geopolitical risk premium amid growing hostilities in the Middle East has been the key reason behind the Brent's price rise this week.
Earlier this week, an Iranian missile landed dangerously close to Israeli Prime Minister Benjamin Netanyahu’s private residence. This news comes days after the killing of Hamas leader Yahya Sinwar.
Oil market investors have been on the edge this entire week as such developments can quickly escalate the Israel–Iran conflict.
“The volatility reflected ongoing uncertainty over the Middle East situation,” VANDA Insights’ founder and analyst Vandana Hari said.
Downward pressure:
Oil demand growth in the US and China has been a major concern for the global oil market this week. It has put some downward pressure on Brent futures.
Commercial crude oil inventories in the US increased by 5.5 million bbls to touch 426 million bbls on 18 October, according to data from the US Energy Information Administration (EIA).
A rise in US crude stocks indicates a decline in oil demand.
In China, economic growth, measured by real gross domestic product (GDP) growth, came in weaker at 4.6% in July-September, below the 4.7% achieved in the previous quarter, Trading Economics reported citing data from China’s National Bureau of Statistics (NBS).
“[Brent crude] oil dropped amid… rising [US] inventories, and weak Chinese demand,” analysts from Saxo Bank noted.
By Aparupa Mazumder
Please get in touch with comments or additional info to news@engine.online
