Brent oil prices are taking a notable hit, dropping over 4% due to a significant increase in U.S. crude oil inventories reported by the Energy Information Administration (EIA). As of Thursday morning, Brent crude fell by 4.8% to $77.33. The West Texas Intermediate (WTI) is also down 5.02% at $72.81, marking a daily loss of $3.85.
The highest surge in crude stockpiles since August has sparked skepticism in the market. Concerns about Chinese refiners processing less oil in October are exacerbating it further.
Despite assurances from OPEC earlier in the week downplaying demand worries, uncertainty lingers regarding China, the world’s leading crude importer. Economic signals from the U.S. and the European Union contribute to these uncertainties.
Also read: Brent Oil Prices Plunge Below $80 Amid Ongoing Conflict
The EU has recently revised its eurozone growth forecasts for 2023 from the previously projected 0.8% in September to 0.6%. Simultaneously, the U.S. experienced sluggish industrial and manufacturing output in October, coupled with a rise in jobless claims.
Even with Washington’s announcement of tighter sanctions on Iran, oil prices remain unaffected. An ING analyst notes that while sanctions persist, lax enforcement by the U.S. has allowed Iranian oil exports to grow this year.
Despite OPEC+ implementing production cuts, oil prices are currently at their lowest since July. Speculation is growing that these production cuts may extend into at least the first quarter of 2024, and doubts linger about Saudi Arabia reversing its voluntary cuts. OPEC+ plans to convene another ministerial meeting on November 26.
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