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In a significant development, China trade data has played a pivotal role in the recent 1% drop in oil prices, effectively countering the impact of supply cuts by Saudi Arabia and Russia. This economic influence is being closely monitored in the energy market.
Crude Oil Prices
Brent crude futures slipped 92 cents, marking a 1.08% decrease, settling at $84.26 per barrel as of 0714 GMT. This decline followed a $1 drop earlier. Meanwhile, U.S. West Texas Intermediate (WTI) crude reached $79.95 per barrel, down 87 cents, or 1.08%.
Commitment from Saudi Arabia and Russia
Both benchmarks seen gains of 30% on Monday after top oil exporters Saudi Arabia . In addition to, Russia reaffirmed their commitment to maintaining extra voluntary oil supply cuts until the year’s end.
China Trade Data
While China reported robust growth in crude oil imports year-on-year and month-on-month for October. Thus, its total exports contracted at a pace quicker than expected, indicating weak global demand.
Analyst Leon Li, based in Shanghai at CMC Markets, said, “China trade data could be seen to be worse than expected, but domestic demand may be picking up.”
Winter Demand Concerns
Worries about a warmer-than-expected winter potentially reducing energy and fuel demand also contributed to the falling prices. CMC Markets’ Li stated, “This year’s winter in the northern hemisphere is relatively warm, which has reduced fuel consumption to a certain extent.”
Read more: Gold Price Today Lingers Below $1,990, Evoking Puzzlement
Supply Side Outlook
Looking ahead on the supply side, the markets are eager to know how long Saudi Arabia and Russia will continue to rein in production. OPEC+ is unlikely to rush into reversing oil production cuts due to weak global demand.
According to OANDA’s senior market analyst, Kelvin Wong, “What will be of more interest to the market is whether they will extend these cuts into early 2024 or start to bring this output back. We should get clarity in early December.”
Saudi Arabia confirmed on Sunday that it would persist with its additional voluntary cut of 1 million barrels per day (bpd) China Trade Data, translating into December’s production of about 9 million bpd. Moscow announced to continue its voluntary supply cut of 300,000 bpd from its petroleum and crude oil product exports by the December end.
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