Oil prices continue to decline amid weak economic data, uncertainty over Israel-Hamas war

Oil prices remained on a jittery path today as they moved between positive and negative territory in the session. Brent crude futures were down 47 cents, or 0.5%, at $89.38 a barrel at 1356 GMT (7:26 pm IST), while U.S. West Texas Intermediate crude futures were down 47 cents, or 0.6%, at $85.02 a barrel, reported news agency Reuters. 

On Monday, both oil benchmarks dipped more than 2% in response to diplomatic efforts in the Middle East to contain the impact of ISrael-Hamas war. Notably, Middle East is the world’s biggest oil-supplying region.

Euro zone may slip into recession, suggests data

Speculations of recession in the euro zone sparked fears of fall in oil demand due to slump in economic activity. The data released on Tuesday, signalled worsening business activity in the Euro zone. The data suggested the bloc may slip into recession.

The data released by Germany suggested that a recession in the country is well underway, while Britain’s businesses reported another decline in activity this month, underlining the risk of recession ahead of the Bank of England’s interest rate decision next week, reported Reuters.

In contrast to Euro zone’s data, economic numbers of the US signalled a positive outlook. Business output ticked higher in October as the manufacturing sector pulled out of a five-month contraction. Meanwhile, fossil fuel demand is expected to peak by 2030 on the basis of current government policies, suggested International Energy Agency.

Julius Baer analyst Norbert Ruecker expects the risk premium inherent to oil prices to disappear within weeks. He suggested prices to go further down next year, reported Reuters.

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Updated: 24 Oct 2023, 08:12 PM IST