Oil Prices Slide: Oil prices saw a decline of more than 1% on Monday, driven by a sense of caution among investors in anticipation of the upcoming U.S. Federal Reserve policy meeting and the release of China’s manufacturing data later this week. This drop offset the support that had earlier come from the tension in the Middle East.
Brent crude futures took a 1.6% hit, equivalent to a drop of $1.11, and settled at $89.37 per barrel by 0350 GMT. Similarly, U.S. West Texas Intermediate crude recorded a 1.2% decrease, amounting to a loss of $1.34, bringing it to $84.20 per barrel.
CMC Markets analyst Tina Teng noted, “Despite an escalation in the Hamas-Israel war, the ground invasion was widely expected. The weekend’s developments suggest no further expansion into a wider regional conflict, which, in turn, led to a retreat in oil prices.”
Both Brent and WTI had experienced a 3% increase last Friday as Israel intensified ground incursions into Gaza, which raised concerns about the conflict potentially spreading in a region responsible for a third of the world’s oil production.
Investors are closely monitoring several key events this week, including the outcome of the U.S. Federal Reserve meeting on Wednesday, U.S. job data, and earnings reports from tech giant Apple Inc (AAPL.O).
Also Read: Geopolitical Tensions Propel Oil Prices: Will the Risk Premium Hold?
These are seen as indicators of any potential economic slowdown that could impact fuel demand in the world’s leading oil consumer. While it’s widely expected that the Fed will maintain unchanged interest rates, the central banks of Britain and Japan are also set to review their policies.
In the coming days, China is slated to report its manufacturing and services PMIs for October. Investors are particularly interested in these figures as they seek signs that the world’s top crude importer is stabilizing economically and that fuel demand is on the rise due to supportive measures from Beijing. Despite the ongoing volatility in prices driven by events in the Middle East, both Brent and WTI experienced declines last week, marking the first time in three weeks.
Vandana Hari, founder of oil market analysis provider Vanda Insights, observed, “But the weekend showed the armed conflict remains limited to Israel and Gaza. In that light, crude appears to be overbought, and I expect it to continue sliding.”
On Monday, there were reports of intense air and artillery strikes in northern Gaza as Israeli troops, supported by tanks, launched a ground assault into the region. These developments prompted further international calls to protect civilians in the area.
Our Reader’s Queries
What is the West Texas Intermediate Spot oil price?
The current WTI Crude Oil Spot Price stands at 75.84, showing no change from the previous market day and a decrease from 79.57 a year ago.
What is the oil price forecast for 2023 WTI?
In October 2023, the average price of WTI crude oil was $86/b. Our projection for 2024 is that the WTI crude oil price will remain relatively stable, with an average of $89/b throughout the year. The three scenarios we have considered all have a common average price of $86/b in November 2023, but diverge thereafter.
What is the WTI crude oil forecast?
A December 2023 forecast predicts that the average price of West Texas Intermediate (WTI) crude oil will drop to 77.63 U.S. dollars per barrel in 2023. This represents a significant decrease of over 15 U.S. dollars from the previous year.
What is the moving average for the WTI?
A moving average is the mean price of a futures contract or stock during a specific time frame. Traders can choose to include a single moving average or multiple time frames on a single chart. For instance, a 14-day moving average of CL WTI futures would represent the average closing price of the CL contract over the past 14 days.