Oil Prices Hit Lowest Since July as China’s Economy Sputters

WTI Drops 4.3% to $77.37, Lowest Since July
Mixed Economic Indicators from China, Decreased Industrial Demand Worries
U.S. Energy Department Lowers WTI Forecast by 1.8% for Next Year

International oil prices have declined due to disappointing economic indicators from China and growing expectations for the end of the U.S. benchmark interest rate hikes. Gold prices, considered a safe asset, also fell.

According to Bloomberg, the New York Mercantile Exchange, and the London ICE Futures Exchange on the 7th (local time), West Texas Intermediate (WTI) crude oil for December delivery fell 4.27% ($3.45) to close at $77.37 per barrel.

As the December WTI dropped below $80 per barrel, international oil prices have remained at their lowest since July.

Bloomberg reported that new doubts about the end of the Federal Reserve’s interest rate hikes, along with China’s disappointing economic indicators, have dragged down oil prices. The decline on this day was the largest since the 4th of last month, and the closing price was the lowest since July 21.

Bloomberg reported that the declining WTI prices signaled the possibility of a long-term bear market as they fell below the 200-day moving average line in the afternoon, leading to a larger drop.

Brent crude oil for December delivery also fell 4.2% ($3.57), recording $81.61 per barrel, the lowest since July.

The decline is attributed to a decrease in demand from China. China, the world’s largest oil importer, increased its oil imports in October. However, China’s exports have been weaker than expected for six consecutive months, indicating a slowdown in global demand. A decrease in China’s exports means a corresponding decrease in oil demand.

Regarding oil supply, Russia is exporting oil at the highest price level in over four months. The ongoing military conflict between Israel and Hamas for the second month has not yet disrupted the flow of oil in the Middle East.

Saudi Arabia and Russia, leading the OPEC Plus, a major oil-producing countries’ consultative body outside OPEC, announced on the 5th that they will maintain the reduction until at least the end of the year.

The Wall Street Journal (WSJ) diagnosed that the strong dollar and high interest rates dampen demand, especially in emerging markets and Japan, and that the Israel-Hamas conflict is not significantly disrupting the international oil flow, promoting the decline.

The U.S. Energy Information Administration (EIA) projected the WTI price for next year at $89.24 per barrel in its monthly report, 1.8% lower than the forecast in October.

CNBC reported that international gold prices have fallen to their lowest in the past two weeks as the preference for safe assets has eased due to ongoing civil wars and wars in major global regions.

The spot gold price recorded $1,968.0988 per ounce, down 0.48%. Gold futures also traded at $1,973.50, down 0.8%.

By. Kim Jun Hyung