/cloudfront-us-east-2.images.arcpublishing.com/reuters/LAXPK422MVNA5HC7UIHRQ3DVAY.jpg "Oil prices hit 4-month low on concerns about U.S., Chinese economy")
[1/2]Storage tanks are seen at Marathon Petroleum’s Los Angeles Refinery, which processes domestic & imported crude oil into California Air Resources Board (CARB) gasoline, CARB diesel fuel, and other petroleum products, in Carson, California, U.S., March 11, 2022. REUTERS/Bing Guan/File Photo Acquire Licensing Rights
NEW YORK, Nov 16 (Reuters) – Oil prices dropped more than 5% on Thursday to their lowest in four months, as investors worried about global oil demand following weak data from the U.S. and Asia.
Brent futures fell $4.38, or 5.4%, to $76.80 a barrel by 1:02 p.m. EST (1802 GMT). U.S. West Texas Intermediate crude (WTI) shed $4.27, or 5.5%, to $72.39. Both contracts traded at their lowest since July 7.
Both WTI and Brent’s front-month contracts also traded below the prices for the second month, a structure known as contango.
“The mood is negative, the charts are negative,” said Phil Flynn, an analyst at Price Futures Group. “It’s going to take something to change that mood, and until then people will ride it down until they realize it’s overdone.”
The number of Americans filing new claims for unemployment benefits increased to a three-month high last week, suggesting that labor market conditions continued to ease.
The report came after other data that showed U.S. retail sales fell for the first time in seven months in October as motor vehicle purchases and spending on hobbies dropped. This pointed to slowing demand at the start of the fourth quarter that further strengthened expectations the Federal Reserve is done hiking interest rates.
OPEC and the International Energy Agency (IEA) have both predicted supply tightness in the fourth quarter, but U.S. data on Wednesday showed inventories were abundant.
Meanwhile, an expected slowdown in Chinese oil refinery throughput also gave investors pause. Runs eased in October from the previous month’s highs as industrial fuel demand weakened and refining margins narrowed.
Still, Chinese economic activity rallied in October as industrial output increased at a faster pace and retail sales growth beat expectations.
“The current price drop is taking place amid a seemingly auspicious backdrop, which suggests that investors simply do not buy into the ‘Q4 stock draw’ narrative; something that is not backed up by the recent weekly EIA reports either,” said Tamas Varga of oil broker PVM.
As the Israel-Hamas conflict appeared to be escalating in Gaza, U.S. officials on Wednesday said they would enforce oil sanctions against Iran, which has long been a backer of Hamas.
Reporting by Stephanie Kelly, Natalie Grover and Andrew Hayley;
Editing by David Goodman, Barbara Lewis and Jane Merriman
Our Standards: The Thomson Reuters Trust Principles.
Omprakash Tiwary is a business writer who delves into the intricacies of the corporate world. With a focus on finance and economic landscape. He offers readers valuable insights into market trends, entrepreneurship, and economic developments.
