Brent futures decline on demand concerns
The front-month ICE Brent contract has plunged $5.58/bbl on the day, to trade at $84.92/bbl at 09.00 GMT.
PHOTO: Getty Images
Upward pressure:
Brent futures drew some support after OPEC+ producers announced to continue their production cuts until the end of this year.
The group's top producers Saudi Arabia and Russia have decided to extend their voluntary supply cuts and export bans through this year.
“Given OPEC's pricing power, while not our base case, a push to $100 per barrel is not out of the question if OPEC+ continues to intervene in markets,” said SPI Asset Management’s managing partner Stephen Innes.
Meanwhile, the world’s third-largest importer India has urged OPEC to show “sensitivity towards consuming countries,” as the world is at a “cusp of economic recession and slowdown.”
India’s petroleum and natural gas minister Hardeep Singh Puri called on OPEC+ producers to be considerate of consuming countries like India as crude oil prices exceeded $95/bbl in September and were on track for $100/bbl.
Downward pressure:
Brent's rally towards $100/bbl was curtailed after the US Energy Information Administration (EIA) reported a massive surge in US gasoline stocks, indicating a potential decline in demand for crude oil in the future.
US Gasoline stocks gained by 6.5 million bbls on the week, to 227 million bbls on 29 September - the highest level since March.
“The current [interest] rates environment and weak gasoline market appear to have been the catalyst” to Brent’s loss, said ING Bank’s head of commodities strategy Warren Patterson.
“Gasoline inventory builds have spilled over into crude markets amid concerns about a potential 2024 recession driven by rising interest rates,” said Innes. These concerns have “caused a shift in the crude futures curve that has negatively impacted prompt crude prices,” he further added.
By Aparupa Mazumder
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