KUWAIT: Oil prices went down for the fifth consecutive week due to an increase in selling of future contracts as well as a decrease in geopolitical tension over in the Middle East, which in turn eased fears over disruption of energy supplies, said experts on Sunday.
Speaking to KUNA in interviews, the experts said that a drop in strategic oil reserves in the US as well as reserves of gasoline in addition to the recovery of the US dollar index boosted economic data, which also showed a decrease in unemployment rates. The price of the Brent crude last week saw a decrease of 0.4 percent to settle at $80.58 per barrel, while the West Texas Intermediate dropped by 0.5 percent at $75.54 per barrel.
The oil market saw unhinged selling operations amid fears of a global recession and slow economic growth after the release of US retail data showed a fall in consumer spending, said member of the teaching staff at the College of Technological Studies of the Public Authority for Applied Education and Training (PAAET) Dr Mubarak Al-Hajri. He predicted that there would be an extension of the OPEC+’s production cut deal. However, he noted that Russia and Nigeria were not abiding by their share in the deal approved by the coalition.
On his part, energy sector expert Jamal Al-Gharabally predicted that the war unleashed by the Zionist entity on the Gaza Strip would continue after the current humanitarian truce, leading to the hike in oil prices, which might reach $120 pb. He went on to say that drawing from the US strategic oil reserves during winter would increase prices and also increase voluntary supplies from Saudi Arabia and Russia by around one million barrels per day.
Meanwhile, oil expert Fares Al-Salem said that oil prices saw a decrease due to global demand on oil derivatives, but such situation would change with the advent of winter in North America and Europe, leading to an expected increase in energy demands this time of the year. He indicated that the status of Chinese economy remained "vague” especially with the piling up of crude oil reserves with expectation of oil import decrease by the first half of next year.
These factors would encourage the OPEC+ coalition to extend its production cut deal for another period. He indicated that OPEC expected an increase in China’s oil demand by 3.2 percent in the first half of 2024, while the International Energy Agency (IEA) expected an increase of 3.9 percent, less than the growth between 2016 and 2019 where it was before the pandemic at 4.5 percent annually, which would affect global demand.
Al-Salem said that China’s global demand for oil was at 25 percent, which was not a factor that would lead to stability in prices without the OPEC+ production cut agreement. — KUNA