Oil prices on track for third weekly loss as supply concerns ease, demand worries rise

November 10, 2023 (MLN): Global oil prices are poised to register their third consecutive weekly loss as concerns about demand have overweighed the supply disruptions caused by the Israel-Hamas conflict.

Brent crude is currently trading at $80.18 per barrel, up by 0.55% on the day.

While West Texas Intermediate crude (WTI) is trading at $76 per barrel, up by 0.59% on the day.

Both the benchmarks are down by over 5.5% since last week.

The ongoing three weeks of decreases mark the longest consecutive weekly decline for both contracts since a four-week dip occurred from mid-April to early May.

"The threat of disruptions to supplies from the Middle East continues to fall," ANZ Research said in a note on Friday, as Reuters reported.

"The conflict remains well contained within Gaza, despite concerns it would escalate as neighboring Arab nations show their displeasure."

The White House said on Thursday that Israel had agreed to pause military operations in parts of north Gaza for four hours a day, though there was no sign of a complete let-up.

The sense that supply disruptions from the Israel-Hamas conflict are easing is occurring as concerns around demand, especially from China, the world's largest oil importer, are rising.

Weak Chinese economic data this week increased worries of faltering demand. Additionally, refiners in China, the largest buyer of crude oil from the world's largest exporter Saudi Arabia, asked for less supply from Saudi Arabia for December.

However, analysts at Citi said in a note on Thursday it expected the downward pressure to ease and prices to recover after falling to their lowest since July earlier this week.

"We expect prices to consolidate, and we maintain our near-term price forecasts with support expected to come from refinery maintenance easing and a shift in the risk-reward for investors following the recent sell-off," Citi said.

"Indeed upside risks abound from current levels, the potential for (the Organization of the Petroleum Exporting Countries and allies) to look to act to defend prices, while supply risks in the Middle East remain elevated.

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