Oil prices dropped again on Monday, as the concerns over the receding demands in U.S. and China escalated, Reuters reported.
Brent crude futures dropped by 0.87 percent at $80.72 a barrel in January. While the U.S. West Texas Intermediate (WTI) crude futures were at $76.49, down by 0.88 percent in December last year.
Both benchmarks were well below the 100-day moving average of $86.61 per barrel for WTI and $82.31 for Brent.
Prices gained nearly two percent last Friday as Iraq voiced support for oil cuts by OPEC+, but lost about four percent for the week, notching their third weekly losses for the first time since May.
“Investors are more focused on slow demand in the United States and China while worries over the potential supply disruptions from the Israel-Hamas conflict have somewhat receded,” Hiroyuki Kikukawa, president of NS Trading, a unit of Nissan Securities stated.
The U.S. Energy Information Administration (EIA) said last week crude oil production in the United States this year will increase by slightly less than previously expected while demand will decline.
They also added that next year, per capita U.S. gasoline consumption could fall to the lowest level in two decades. Weak economic data last week from China also increased fears of wavering demand.
China’s consumer prices fell to pandemic-era lows in October, casting doubts on the strength of the country’s economic retrieval.
Kikukawa stated that oil prices would be supported if WTI approaches $75 a barrel. “If the market falls further, we will likely see support buying on expectations that Saudi Arabia and Russia would decide to continue their voluntary supply cuts after December,” Kikukawa said.
Top oil exporters Saudi Arabia and Russia confirmed last week they would continue with their additional voluntary oil output cuts until the end of the year as concerns over demand and economic growth continue to drag on crude markets.
On the supply side, U.S. energy firms cut the number of oil rigs operating for a second week in a row to their lowest since January 2022.
Energy services firm Baker Hughes (BKR.O) said that the rig count points to future output.