Brent Price Falls Below $87 on Demand Fears
Amidst growing uncertainties in the global economy, Brent crude futures dropped by over 2% to below $87 per barrel as investors weighed persistent demand concerns against tight global supplies.
Market analysts noted that a deteriorating outlook for global demand has been keeping markets on edge, with advanced economies, mainly the US and Europe, seeing a drop in economic activity due to tightening financial conditions and top crude importer China’s facing the possibility of tighter coronavirus-induced restrictions amid rising infections.
China has seen a surge in covid-19 cases, the move that forced Beijing to introduce a zero covid-19 virus policy to combat the pandemic squarely. READ: Oil Dips Below $90 on Developed Markets Recession Fears
On the supply side, prospects that the Organisation of Petroleum Exporting Countries (OPEC) could further intervene in markets to shore up prices in case of a recession-driven demand downturn have been offering support.
OPEC’s de-facto leader Saudi Arabia has recently reassured investors that it is ready to reduce production further to balance supply and demand if needed.
On top of that, an EU ban on Russian crude imports from December 5th and an imminent G7 price cap on Putin’s oil exacerbated concerns about tighter supplies.
Similarly, West Texas Instrument (WTI) crude futures dropped over 2% to below $79 per barrel as investors weighed persistent demand concerns against tight global supplies. # Brent Price Falls Below $87 on Demand Fears