Oil prices saw a decline on Monday after a recent rally, with concerns about weakening demand in the United States and China impacting market sentiment.
At 0051 GMT, Brent crude futures for January dropped by 35 cents, or 0.4%, to $81.08 a barrel, while U.S. West Texas Intermediate (WTI) crude futures for December hit $76.82, a decrease of 35 cents, or 0.5%.
The previous Friday, both benchmarks experienced nearly a 2% gain due to the announcement of oil cuts by OPEC+, supported by Iraq – but the week still ended with a 4% loss, marking their third consecutive weekly losses since May.
Hiroyuki Kikukawa, president of NS Trading, observed that investors are primarily concerned about slowing demand in the U.S. and China, while worries about potential supply disruptions due to the Israel-Hamas conflict have diminished.
Recent reports from the U.S. Energy Information Administration indicated a slightly lower expected rise in U.S. crude oil production and declining demand. Meanwhile, weak economic data from China, the world’s leading crude oil importer, has further fueled fears of demand decline, with Chinese refiners requesting reduced supply from Saudi Arabia this December.
Despite these factors, Kikukawa believes that oil prices may find support as WTI approaches $75 a barrel, with potential buying spurred by expectations of continued voluntary supply cuts from Saudi Arabia and Russia.
Confirming this, top oil exporters Saudi Arabia and Russia recently announced plans to extend their additional voluntary oil output cuts until the end of the year, in response to ongoing concerns about demand and economic growth.
OPEC+ will convene on Nov. 26 to discuss further actions, as U.S. energy firms have subsequently reduced the number of oil rigs in operation for the second consecutive week to the lowest level since January 2022, according to energy services firm Baker Hughes.
Despite the recent decline, industry experts see potential supportive factors for oil prices in the near future.
By Yuka Obayashi
