Oil prices decline as disappointing data is released
Oil prices fell 2% on Monday after data from China revealed that the world’s top oil importer’s demand remained subpar in September due to rigorous COVID-19 policies and restrictions on fuel exports.
After increasing 2% the previous week, Brent crude futures for December settlement decreased $1.67, or 1.8%, to $91.83 a barrel by 0855 GMT. US West Texas Intermediate crude for December delivery was down $1.78 or 2.1% at $83.27 per barrel.
According to ANZ analysts, “the recent improvement in oil imports collapsed in September.” Independent refiners failed to make use of higher quotas since demand was still being affected by ongoing COVID-related lockdowns.
Falling refinery margins and export restrictions “exacerbated this,” the analysts claimed.Even though China’s third-quarter gross domestic product (GDP) growth above estimates.
Even though US President Joe Biden announced the sale of the final 15 million barrels of oil from the US Strategic Petroleum Reserves, Brent increased last week. A record 180 million barrel discharge that started in May includes the sale.
We are prone to believe that the market is acting irrationally once again for a longer period of time than the investor can continue to be solvent. Trading is tense due to the recent terrible news, and no one wants to catch a falling knife. The same thing occurred in 2008 when the price of oil reached $37.
Oil Prices: effects on economy
Although we can see benefits for the US in pressuring Iran and Russia to the bargaining table, as well as benefits for the Saudis in eliminating shale producers, I don’t think an excess supply of just over 2% and a moderate strengthening of the USD can explain it. It’s also vital to remember that despite “sluggish global demand,” oil demand is really rising. I believe that oil dealers are acting in a classic herd mindset.
Petroleum has the huge advantage of having a market that is global, liquid, deep, and much greater than what any one government can manage. Because geopolitical issues have significant short-term influences, it is nearly impossible to make price projections on a micro scale (i.e. from one year to the next) (witness the price action the day after Iraqi forces rolled into Kuwait). However, fundamental supply-demand balances reassert themselves over a period of two or more years.
The Polymerupdate team was alerted by a domestic industry source about the PTA price revision published by Indian Oil Corporation Ltd. (IOCL). According to the source, PTA local rates will be reduced by Rs. 2.60/kg basic as of October 22, 2022. The new base price for kilograms is Rs. 83.20.
The effect of price fluctuations has a partly self-correcting mechanism from the point of view of the overall economy. Because high oil prices are good for the oil firms. Bad for the rest of the economy, and vice versa for low oil prices. However, we would contend that the advantages of oil prices outweigh any negative effects on the economy. Brought on by the underperformance of oil corporations and oil-producing nations.
