Oil prices recover slightly but remain near multi-month lows

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7th December 2023 – (New York) In early Asian trading, oil prices regained some ground after experiencing losses, although they remained at their lowest levels since June. The decline in the previous session was attributed to high U.S. crude output and an increase in gasoline inventories.

Brent crude futures saw a rise of 32 cents, or 0.43 per cent, reaching $74.62 per barrel by 0116 GMT. Meanwhile, U.S. West Texas Intermediate crude futures increased by 33 cents, or 0.48 per cent, reaching $69.71 per barrel.

According to Tina Ting, a markets analyst at CMC Markets, the oversold condition of oil markets suggests that the current recovery could be a short-term rebound, as stated in a note.

Analysts at ANZ noted that in the previous session, the market was unsettled by data revealing that U.S. output remains close to record highs, despite a decline in inventories. Additionally, higher inventories of fuel products contributed to the bearish sentiment.

The Energy Information Administration (EIA) reported a significant increase of 5.4 million barrels in gasoline stocks for the week ending Wednesday, bringing the total to 223.6 million barrels. This figure far exceeded expectations of a 1 million-barrel build.

Russian President Vladimir Putin and Saudi Crown Prince Mohammed bin Salman held discussions on Wednesday regarding further cooperation on oil prices. This meeting among members of the Organization of the Petroleum Exporting Countries (OPEC) and its allies, collectively known as OPEC+, may instil confidence in the market regarding the impact of production cuts.

Despite the announcement of voluntary output cuts by OPEC+ last week, prices fell by 2 per cent. There are concerns about the full implementation of these production reductions.

The market was also influenced by concerns about China’s economy, which contributed to the decline in prices. Market participants will be closely monitoring China’s trade data, set to be released later on Thursday. China’s export data for October has been worse than expected, with a year-on-year decline observed since May.