By Adedapo Adesanya
Oil prices fell further on Thursday touching a six-month low, as investors worried about sluggish energy demand in the United States and China.
Brent crude futures dropped 48 cents to $73.82 a barrel and the US West Texas Intermediate (WTI) crude futures fell by 33 cents to $69.05 per barrel, with both benchmarks posting their lowest prices since late June.
Analysts noted that the largest global importer of oil, China, is shuttering its interests in crude and this has created pressure on prices.
Chinese customs data showed that crude oil imports in November fell 9 per cent from a year earlier as high inventory levels, weak economic indicators, and slowing orders from independent refiners weakened demand.
While China’s total imports dropped month-on-month, its exports rose in the month for the first time in six months, suggesting an uptick in global trade flows may be helping the manufacturing sector.
However, ratings agency, Moody’s, put many of China’s state-owned companies and banks on downgrade warnings on Wednesday, a day after it put a downgrade warning on China’s sovereign credit rating.
This is happening as the largest producer, the United States, continues with headline output as output remained near record highs of over 13 million barrels per day, according to the US Energy Information Administration (EIA) data showed on Wednesday.
US gasoline stocks rose by 5.4 million barrels last week to 223.6 million barrels, the EIA said, more than 500 per cent higher than the 1 million barrel build that had been expected.
Prices have failed to be propped up by moves made by the Organisation of the Petroleum Exporting Countries (OPEC) and allies, OPEC+, which last week announced a combined 2.2 million barrels per day in voluntary output cuts for the first quarter of next year.
In fact, oil prices have fallen by about 10 per cent since the announcement indicating that the market seems to be suggesting that they don’t believe OPEC+ can follow through on their cuts.
Saudi Arabia and Russia, the two biggest oil exporters, on Thursday called for all OPEC+ members to join an agreement on output cuts for the good of the global economy.
Russian President, Mr Vladimir Putin, and Saudi Crown Prince, Mr Mohammed bin Salman, met on Wednesday to discuss further oil price cooperation, while OPEC+ member Algeria said it would not rule out extending or deepening oil supply cuts.
Modupe Gbadeyanka