Oil is expected to drop for a third week as concerns about demand mount.

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                                                                    Source REUTERS

 Oil is expected to drop for a third week as concerns about demand mount.

November 10, LONDON (Reuters) - Although oil prices increased on Friday, they are expected to decline for a third week due to decreasing demand and the focus of the market on OPEC and its allies this month for a crucial meeting that will decide the group's next course of action on production.

At 1109 GMT, the January contract for Brent crude was up 84 cents, or 1.1%, at $80.85 a barrel, while the December contract for U.S. West Texas Intermediate (WTI) crude was up 78 cents, or 1%, at $76.52.


Each contract is expected to decline by roughly 5% each week.

"Concerns about demand have replaced the fear of production outages related to the Middle East conflict," stated Commerzbank.

This week's weak Chinese economic data heightened concerns about declining demand. Furthermore, Chinese refiners, who purchase the most crude oil from Saudi Arabia, the world's biggest exporter, requested a reduction in Saudi Arabia's supply for December.

When the Organization of the Petroleum Exporting Countries and its allies, led by Russia, convene on November 26 to decide on production policy, the main topic of discussion will be whether Saudi Arabia will continue the voluntary cut of one million barrels per day that is scheduled to finish this year. This group is known as OPEC+.

"We believe the chances that Saudi Arabia will extend its unilateral ... cut well into 1Q24 is certainly increasing given renewed market concerns about Chinese demand and the broader macro outlook," Helima Croft, an analyst at RBC Capital Markets

Citi analysts predicted in a report on Thursday that after prices earlier this week dropped to their lowest point since July, the downward pressure would eventually abate and prices would rise.

"We expect prices to consolidate, and we maintain our near-term price forecasts with support expected to come from refinery maintenance easing and a shift in the risk-reward for investors following the recent sell-off," stated Citi.


Additional reporting by Sudarshan Varadhan in Singapore Editing by Nick Macfie

Our Standards: The Thomson Reuters Trust Principles.

Source REUTERS


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