Oil prices declined for the third consecutive session due to sluggish economic data from Germany, the euro zone, and Britain, which raised concerns about energy demand. Brent crude futures dropped by 1.8% to $88.20 a barrel, while U.S. West Texas Intermediate crude futures fell by 2% to $83.78 a barrel.
The euro zone witnessed a surprising downturn in business activity data, indicating a potential recession in the bloc. Similarly, German readings suggested that the country is already in a recession. Britain’s businesses also reported a decline in activity, highlighting recession risks ahead of the Bank of England’s interest rate decision.
Mizuho analyst Robert Yawger noted that there is a growing dialogue about the global economy worsening. He mentioned that the presence of top bankers and financial experts in Saudi Arabia for the “Davos in the Desert” event, discussing the poor state of the economy, adds to the negative sentiment.
In contrast to Europe, U.S. data showed an increase in business output in October, with manufacturing recovering from a five-month contraction. The strength of the U.S. economy boosted the dollar, making dollar-denominated oil more expensive for holders of other currencies.
The International Energy Agency predicted that fossil fuel demand would peak by 2030 based on current government policies.
On Monday, both oil benchmarks dropped over 2% as efforts to contain the conflict between Israel and Hamas intensified in the Middle East, the largest oil-supplying region.
Julius Baer analyst Norbert Ruecker stated that the risk premium in oil prices should disappear within weeks, and he expects prices to decline further next year.
A RushHourDaily poll anticipated a weekly increase in crude stockpiles in the U.S.
The American Petroleum Institute and the U.S. Energy Information Administration are scheduled to release storage reports on crude oil.
Overall, the article discusses the decline in oil prices due to weak economic data, the impact of geopolitical tensions, and the outlook for oil demand.
