Oil is declining as demand growth concerns outweigh falling US inventories

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Oil is declining as demand growth concerns outweigh the drop in US inventories, today, Thursday, September 24, 2020 11:04 am

History: September 24, 2020

Oil prices plunged today, Thursday, as they were pressured by fears that the US economic recovery is slowing with the continuing outbreak of the Corona virus, while a new wave of cases of Covid-19 led to the reimposition of travel restrictions in several countries.

Concern about demand and the economic outlook due to the new increase in Coronavirus infections led to a rise in the dollar as investors switched to safer assets, adding to pressure on oil prices. The rising dollar reduces the attractiveness of oil, denominated in the US currency, to global buyers.

By 06:50 GMT, US West Texas Intermediate crude futures were down 37 cents, or 0.9%, to $ 39.56 a barrel, while Brent crude futures were down 34 cents, or 0.8%, to $ 41.43 a barrel.

The two benchmarks rose slightly on Wednesday after government data showed that stocks of crude and fuel in the United States fell last week.

Gasoline stocks fell more than expected, dropping four million barrels, and distillates recorded a surprise drop of 3.4 million barrels.

But demand for fuel in the United States has remained weak as the pandemic restricts travel. Government data show that the average demand for gasoline in four weeks reached 8.5 million barrels per day last week, 9 percent less than a year ago.

Prices fell after data showed that business activities slowed in the United States in September, officials at the Federal Reserve (US Central Bank) hinted at concerns about a stalled recovery and Britain and Germany imposed restrictions to curb new infections with the Corona virus, all of which are factors affecting the outlook for demand On fuel.

On the supply side, the market remains concerned about resuming exports from Libya, although it is unclear how quickly volumes can increase.

“Obviously, that would be something the oil market does not want at the moment,” said Vivek Dahar, a commodity analyst at the Commonwealth Bank.

Meanwhile, the state-run Iraqi News Agency quoted Iraqi Oil Minister Ihsan Abdul-Jabbar as saying today, Thursday, that he expects to reach an agreement with OPEC + to increase his country’s exports of crude oil.

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