Oil prices experienced fluctuations on Monday, driven by renewed concerns about declining demand in the United States and China, along with mixed signals from the U.S. Federal Reserve, contributing to market uncertainty.
Brent crude oil, against which Nigerian crude oil is priced, decreased by 8 cents to $81.35 a barrel while the U.S. West Texas Intermediate (WTI) crude lost 6 cents to $77.11 per barrel.
“Investors are more focused on slow demand in the United States and China while worries over the potential supply disruptions from the Israel-Hamas conflict have somewhat receded,” noted Hiroyuki Kikukawa, president of NS Trading.
The U.S. Energy Information Administration (EIA) reported a slightly lower-than-expected increase in crude oil production in the United States this year, coupled with a predicted decline in demand.
Concerns about potential U.S. policy tightening also emerged after Federal Reserve Chair Jerome Powell suggested the possibility of raising interest rates if progress on curbing inflation stalls.
More hawkish comments from the Federal Reserve are unwelcome in the crude oil market, particularly as recent data from China and the U.S. has revived concerns about economic growth.
Weak economic data from China, the largest crude oil importer globally, heightened fears of diminishing demand.
Despite the challenges, top oil exporters Saudi Arabia and Russia confirmed their commitment to additional voluntary oil output cuts until the end of the year.
OPEC+ is set to meet on November 26 to discuss further developments in the oil market.