By Adedapo Adesanya
The Brent crude price dropped 4.6 per cent or $3.76 on Thursday to close at $77.42 per barrel as investors worried about global oil demand following weak data from the United States and Asia.
Also, the US West Texas Intermediate (WTI) crude depreciated during the session by 4.9 per cent or $3.76 to finish at $72.90 a barrel after the number of Americans filing new claims for unemployment benefits increased to a three-month high last week.
The weekly jobless claims report from the US Labor Department on Thursday, the most timely data on the country’s economic health, also showed unemployment rolls expanding to levels last seen two years ago.
The labour market is slowing as higher interest rates curb demand, consistent with slowing economic activity. This development suggests that labour market conditions continued to ease.
The report came after other data that showed US retail sales fell for the first time in seven months in October as motor vehicle purchases and spending on hobbies dropped.
Retail sales slipped 0.1 per cent last month, the US Commerce Department’s Census Bureau said after data for September was revised higher to show sales increasing 0.9 per cent instead of the previously reported 0.7 per cent rise.
This pointed to slowing demand at the start of the fourth quarter that further strengthened expectations the country’s Federal Reserve is done hiking interest rates.
Meanwhile, an expected slowdown in Chinese oil refinery throughput also gave investors pause. Runs eased in October from the previous month’s highs as industrial fuel demand weakened and refining margins narrowed.
Still, Chinese economic activity rallied in October as industrial output increased at a faster pace and retail sales growth beat expectations.
Also, the Organisation of the Petroleum Exporting Countries (OPEC) and the International Energy Agency (IEA) have both predicted supply tightness in the fourth quarter, but US data on Wednesday showed inventories were abundant.
As the Israel-Hamas conflict appeared to be escalating in Gaza, US officials on Wednesday said they would enforce oil sanctions against Iran, which has long been a backer of Hamas.
This comes amidst US lawmakers debating several pieces of legislation to pressure Iran after the October 7 attacks on Israel by Hamas that killed at least 1,400 people, mostly civilians.
Hamas has long been backed by Iran, but the country has denied any involvement in the attacks.
Earlier this month, the US House of Representatives passed a bill to bolster sanctions on Iranian oil.
Dipo Olowookere