The oil price continues its decline in recent weeks. Demand is under pressure in both the United States and China. Developments in the Asian country in particular are putting pressure on prices, as confidence in government intervention has declined sharply.
The oil price continues last week's decline. On Thursday, November 2, oil traded at $86,85 per barrel. On Wednesday, November 8, $79,54 remained, a decline of 8,4%. This put the oil price at its lowest point since mid-July.
Now that fears surrounding the escalation of the conflict between Israel and Hamas are subsiding, the oil market is again responding primarily to demand in the world's largest economies. As is often the case this year, the danig is the direct result of concerns about global demand. The Chinese economy in particular worries analysts. New economic data shows that China suffered from deflation in industrial goods for the thirteenth month in a row in October. Even more worrying is the fact that core inflation has fallen from 0,8% to 0,6%, which means that China's inflation target of 3% is once again out of sight. The new blow follows last week's news that China's manufacturing industry has shrunk.
The weak economic results appear to be undermining the oil price. Disappointing Chinese economic data put pressure on the oil market throughout the year. This summer, the pressure was relieved by various interventions by the Chinese government. The market gained confidence that the Chinese government is committed to getting the Chinese economy back on its feet. For a while that seemed successful. The deflation that occurred at the beginning of the summer was successfully combated and industrial activities increased. The market's confidence has now disappeared like snow in the sun, now that the intervention only proved effective for a short time.
However, there was a net plus in Chinese oil demand. However, there is a clear peak due to the eight-day Golden Week. During Golden Week, a large majority of Chinese people get a week off to visit their family. This caused a temporary increase in oil consumption of 71,3%. If you subtract that consumption, little of the increase remains.
USA
There are also serious concerns about demand in the United States. The US Energy Agency (EIA) expects US oil demand to drop by 300.000 barrels per day due to the ailing economy. This is a significant drop from their previous prediction. Until recently, the agency had targeted an increase of 100.000 barrels per day. In addition, the supply turned out to be much greater than demand this week. In total, inventories increased by 12 million barrels. This is the largest increase since the beginning of the year.
The price on the diesel market follows the trend on the oil market and is falling sharply. On Thursday, November 2, diesel traded for €138,07 per 100 liters. On Thursday, November 8, the price had fallen to €134,11.