Oil prices rose on Monday following more than a 7 percent dip last week as worries about demand in China, the world’s top oil importer, rose and concerns about potential supply disruptions in the Middle East eased.
By 5:22 GMT, Brent crude futures had risen 0.53 percent to $73.45 per barrel while U.S. West Texas Intermediate crude increased by 0.66 percent to $69.68 a barrel. Last week, Brent fell over 7 percent while U.S. West Texas Intermediate crude lost around 8 percent which marked the largest weekly decline since September 2.
Mideast tensions intensify
Oil prices dipped last week on slowing economic growth in China and falling risk premiums in the Middle East. U.S. President Joe Biden said on Friday that there was an opportunity to “deal with Israel and Iran in a way that ends the conflict for a while”.
However, tensions in the Middle East intensified over the weekend, raising concerns over the crude supply chain again.
China cuts lending rates
On Monday morning, China cut its benchmark lending rates, in line with market hopes, as part of a broader package of stimulus measures to revive the slowing economy. Data on Friday revealed that China’s economy grew at the slowest pace since early 2023 in the third quarter, fueling additional concerns about the country’s oil demand and prices.
As for supply, U.S. energy firms cut the number of oil and natural gas rigs operating for the fourth time in five weeks last week, according to a report by Baker Hughes. In addition, China’s refinery output declined for the sixth straight month as slimmer refining margins and weak fuel consumption restricted processing.
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U.S. production hits new high
Last week, the Energy Information Administration revealed that crude production in the U.S. hit a record high with output rising by 100,000 barrels per day in the week to October 11 to 13.5 million barrels per day. Two months ago, production peaked at 13.4 million barrels per day. The EIA also said that U.S. crude oil, gasoline, and distillate inventories fell last week.
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