Crude oil prices experienced a significant decline today following that Israel is prepared to refrain from targeting Iranian oil facilities in its military response. This news had oil traders on high alert earlier this month.
Israeli Prime Minister Benjamin Netanyahu had assured U.S. allies that the Israel Defense Forces (IDF) would concentrate on military targets rather than oil and nuclear facilities. This statement effectively negated the geopolitical premium that had been bolstering oil prices last week.
The drop in oil prices was further exacerbated by a series of bearish developments that emerged at the start of the week. Notably, Chinese consumer price data fell short of expectations, disappointing oil traders who were hoping for more robust increases in September.
Additionally, OPEC released its latest monthly report, which included a revised forecast for global oil demand. For the third consecutive month, the organization has lowered its growth estimate, citing actual consumption data for the year and expectations for reduced demand in certain regions.
According to OPEC’s October Monthly Oil Market Report, global crude oil demand is now projected to increase by 1.93 million barrels per day in 2024, a reduction of 106,000 barrels per day from last month’s forecast. A substantial portion of this downward adjustment can be attributed to revised expectations for Chinese oil demand, which has been decreased to a growth estimate of 580,000 barrels per day for this year, down from 650,000 barrels per day in the previous report.
Adding to the negative sentiment surrounding oil prices, recent energy import data from China indicated a 3% decline in crude shipments during the first nine months of the year. Moreover, imports fell by more than 7% in September as refineries undertook planned maintenance amid unfavorable profit margins.
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