- Oil prices fall by about $3/bbl, hit lowest since July 24
- Chinese data raises concerns around country’s oil demand
- Fed Chair Powell to speak later this week
- API data on US crude, fuel stocks due after 2000 GMT on Tuesday
BENGALURU, Nov 7 (Reuters) – Oil prices fell more than 3% on Tuesday to their lowest since late July, as mixed Chinese economic data and rising OPEC exports eased fears about tight markets and as the dollar strengthened.
Brent crude futures fell $2.95, or 3.5%, to $82.23 a barrel as of 1:41 pm ET (1841 GMT). US West Texas Intermediate crude fell to $77.94 a barrel, down $2.88, or 3.6%.
Both contracts hit their lowest levels since July 24, with Brent set to close below $84 a barrel for the first time since Hamas Islamists’ Oct. 7 attack on Israel.
“Traders will remain on high alert for signs of a wider conflict emerging in the region that could disrupt supplies, but it seems those fears are subsidizing,” OANDA analyst Craig Erlam said.
A recovery in oil exports from the Organization of Petroleum Exporting Countries also added to the pressure on oil prices, UBS analyst Giovanni Staunovo said.
“OPEC crude exports are up by about 1 million barrels per day (bpd) since their August low, as a result of seasonally lower domestic demand in the Middle East. It seems it is too much supply to be absorbed by oil consuming nations,” Staunovo said.
The premium on front-month loading Brent contracts over ones loading in six months was at a 2-1/2-month low, indicating less concern about supply deficits.
On the demand side, China’s crude oil imports in October showed robust growth but its total exports of goods and services contracted at a faster pace than expected.
“The data signals the continued decline in the Chinese economic outlook driven by deteriorating demand in the country’s largest export destination: the West,” City Index analyst Fiona Cincotta said.
The US Energy Information Administration now expects total petroleum consumption in the country to fall by 300,000 bpd this year, reversing its earlier forecast of a 100,000 bpd increase.
Fading investor hopes for a peak in global interest rates also helped lift the US dollar (.DXY) from recent lows, making oil more expensive for holders of other currencies.
The US central bank may have to do more to reduce inflation to its 2% target, Minneapolis Federal Reserve President Neel Kashkari said. Investors are awaiting comments from Fed Chair Jerome Powell, due on Wednesday and Thursday.
API industry data on US crude stocks is expected after 2000 GMT on Tuesday.
Additional reporting by Trixie Yap in Singapore and Yuka Obayashi in Tokyo; editing by Jason Neely, Emelia Sithole-Matarise, Jonathan Oatis and David Gregorio
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Shariq reports on energy markets with a focus on US physical refined products and global financial oil markets. He is a regular contributor to energy M&A and corporate moves at top shale companies including oil majors and top oil focused private equity firms. He was nominated for 2020 Reuters journalist of the year for exclusive coverage of mass layoffs and bankruptcies in the shale patch during the peak of the COVID-19 pandemic. Shariq graduated in journalism and holds six years of experience covering energy equities and markets. Contact: 918884014512