Oil - at seventh consecutive week of decline

Rising global supply and an uncertain demand outlook pushed oil prices to a five-month low last week, with crude headed for its seventh straight weekly decline, according to international media.

West Texas Intermediate (WTI) futures for January next year fell to a low of $68.8 a barrel on Thursday, while Brent crude for February 2024 fell to a low of $73.6 dollars per barrel, according to Investing.com data. C

ompared to the highs at the end of September, the price of oil has decreased by about 25% for WTI and 21% in the case of Brent, relevant for the European market.

According to Business Insider, the recent decline in prices comes as U.S. gasoline stockpiles rise and U.S. oil production rose to all-time highs in September and October. Following the rise in US production, some analysts have warned that OPEC+, particularly Saudi Arabia, may flood the market to counter the US shale oil boom. Flooding the market with oil would cause the price to crash, forcing small suppliers out of the market.

On the other hand, OPEC tried to mitigate the drop in the price of oil in the last period, by announcing production cuts, especially from Saudi Arabia. Data and analysis provider Kpler expects the Saudis to maintain their 1 million bpd cut through next year, but traders doubt the commitment of all OPEC+ nations to voluntary output cuts, which have contributed to recent price declines , according to the mentioned source.

Overall, OPEC+ countries agreed to cut their combined output by 2.2 million barrels per day for the first quarter of next year, Reuters writes.

"While OPEC+ is cutting production, there are countries outside the group that are increasing it, as well as countries within," said Matt Smith, chief oil analyst for the Americas at Kpler. "The United States increased production, as did Canada, Guyana, Brazil. But also Venezuela and Iran, countries within OPEC, increased production. Basically, OPEC+ is making way for non-OPEC supply, while demand is starting to weaken."

Meanwhile, the world's largest economy is showing signs of slowing, and gas prices have fallen to eleven-month lows, according to Business Insider.

"The oil market is increasingly sensitive to signals that the economic landscape continues to relax," said Quincy Krosby, global chief strategist at LPL Financial, quoted by Business Insider. "Lower crude oil prices reflect a declining economy."

The reduction in demand can also be seen in China, whose economic downturn is deepening and affecting all sectors of the economy. Last week, Moody's reduced the outlook for China's sovereign rating to negative, and pessimism about Beijing's ability to get the country out of the real estate turmoil, the drop in foreign investment and the slowdown in economic activity are elements that put pressure on the price of oil, writes Business Insider.

According to Reuters, China's crude imports fell 9 percent in November from a year earlier, and India's fuel consumption eased last month after hitting a four-month high in October. At 14:00 on Friday, the petro was up, but on a weekly basis, crude oil was heading for its seventh consecutive decline.