Oil Traders Ignore Signs Of A Sluggish Economy
The price of crude oil remained steady at the start of the fourth trading session of the week, holding gains from the previous session as reports showed that China’s economy shrank even more than expected, growing at just 4.9% in the third quarter, as the country faced a power shortage, COVID19 restrictions, a crackdown on a range of companies, and a real estate debt crisis.
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Brent crude futures rose nearly a percent on Wednesday, trading over $85 barrel.
The December West Texas Intermediate crude futures price increased by 0.4% to $83.79 per barrel. November WTI crude, which expired on Wednesday, settled 1% higher than it reached earlier in the session.
It appears that speculators are boosting oil prices by ignoring signs of an economy slowing around the world. Although supply forecasts are not yet bearish, the black gold may experience a pullback soon due to its bearish outlook.
The U.S. Energy Information Administration (EIA) said Wednesday that crude oil stocks decreased by 431,000 barrels to 426.5 million barrels during the week ended Oct. 15. Analysts had expected a 1.9-million-barrel rise.
At the Cushing, Oklahoma delivery hub, U.S. oil inventories fell to their lowest level since October 2018, indicating that market conditions are still tight.
Despite the summer COVID flare-ups in the U.S. and Asia, demand for crude oil has rebounded, but supply has lagged behind demand.
From the end of August until the end of September, Hurricane Ida severely limited the U.S oil supply from the Gulf of Mexico.
Shell’s platform will remain offline until the end of 2021, so supply won’t fully recover until early next year.
As a result, OPEC+ continues to keep the market tight, adding just 400,000 barrels per day to its supply each month
While the U.S. and other oil-consuming nations have called for higher oil prices to be brought down, and the energy crisis has pushed utilities to turn to oil-fuelled power generation amid record-high natural gas prices, the demand for oil products has increased.