U.S. West Texas Intermediate (WTI) is in a bear market, down over 20% from late September’s $95 high

crude oil

U.S. West Texas Intermediate (WTI) is in a bear market, down over 20% from late September’s $95 high.

The summer price rise from OPEC output cuts and geopolitical fears of the Middle East conflict had clear effects on the oil industry. As of today’s opening trading hours, the West Texas Intermediate has officially entered a bear market. The index declined by more than 5%; however, hours later, the index managed to bounce back to its current price level of $75.73 per barrel.

OPEC+ previously stated “global oil market fundamentals remain strong,” but a potential reconsideration of production cuts could impact this outlook.

But on Thursday’s decline of 3%, the benchmark posted its fourth consecutive weekly decline. And compared to September’s high of $95, the WTI has lost nearly 20% of its market price in the past nine weeks.

Based on different reports and analysis comments, the main reason for this decline is more than one reason. Marketers see that there are three contributing factors. Swelling inventories and rising U.S. oil stockpiles have contributed massively to the crisis, adding to the OPC summer cuts. And lastly, the Western price policy that initially aimed to impact Russia’s oil revenue was largely ineffective.

Marketers wanted this to happen if the U.S. and Western countries kept harassing Russia economically, because Russia owns more than 60% of Europe’s oil supplies.

Meanheuk in Wall Street, the stock market is heading for another weekend low; two of the Maon benchmark falls this week. The S&P 500 benchmark scored a 0% gain as of 12:29 a.m. ET. Nasdaq fell by 0.06%, and the Dow indexes were down by 0.01%.

The decline in the stock market indirectly increases the Concerns about demand have intensified due to a weakening global economic outlook, particularly in China, which stands as the largest importer of crude oil. The unease is underscored by Chinese refiners taking the proactive step of reducing their daily processing rates.

With the vital role that China plays in the global energy landscape, the uncertainty of the global economy has increased to an unknown and unpredicted level. In turn, it adds uncertainty to the trajectory of oil demand and highlights the interconnectedness of economic factors in influencing the energy market.

In other economic data, this week keeps giving mixed indicators. The weekly jobless claims have increased by 231.000 compared to the previous 218.00. While U.S. retail sales declined for the first time in seven months in October, hinting at slowing demand at the beginning of Q4, this combined data has boosted sentiment among investors that the Fed policymakers will keep interest rates at the previous level of a quarter-basis point in December’s meeting.

Furthermore, October housing starts slightly exceeded expectations at 1.372 million, showing an improvement from the previous month. Building permits were higher than anticipated at 1.487 million, contributing to the overall economic landscape.

With these mixed indicators, investors will continue to turn their attention to the market-eyeing next OPEC+ meeting in Vienna in a week.

Written by Editor

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