New Delhi: In a major upset, benchmark Brent crude oil prices slipped below $70 per barrel for the first time in over 2 years led by concerns over a slippage in demand from China and overproduction by the OPEC+ grouping of oil producers. Brent crude prices were last below $70 per barrel in December 2021.
Brent crude prices slipped 3.49 per cent to $69.33 per barrel on Tuesday. The OPEC+ recently forecasted a lower-than-expected rise in fuel demand for the remaining year 2024 and the upcoming year 2025. The grouping halted its plans of a production ramp-up amid these concerns. The OPEC’s monthly oil market report indicated a 2.03 million barrels per day rise in demand in 2024, down from a previosu forecast of 2.11 million bpd.
What Brent crude price decline indicates?
The price decline comes ahead of the International Energy Agency’s monthly oil market report. However, there are broader concerns related to the global economic scenario since a slippage in demand may indicate a global slowdown. China’s crude oil imports in August 2024 declined 7 per cent year-on-year, according to data shared by Saxo Bank’s head of commodity strategy Ole S Hansen.
Moreover, in contact terms the net long on Brent crude oil slumped by 38,000 to 42,000, a 12-year low when combined with WTI crude oil long contracts. This is the lowest exposure to energy contracts since 2011, according to Hansen. The ICE benchmark began to collect data in contracts in 2011.
Another major dent on the Brent crude price per barrel was the supply disruption caused by the Francine tropical storn in the US.
Will govt slash petrol diesel prices?
The Centre is reportedly mulling a price cut for petrol and diesel as inflation has seemingly come under control and food prices indicate a decline. Oil minister Hardeep S Puri also indicated that oil prices could be lower if it was possible. However, oil prices are not just determined by the price of a barrel of crude il but include the price of refining by oil marketing companies.
To be sure, the Centre slashed petrol and diesel prices ahead of the Lok Sabha polls. The price of India’s crude pil basket has average over $72 per barrel, indicating that petrol and diesel prices may not be in for a major correction just yet.
India has also benefited from the availability of cheaper Urals crude oil from Russia since the West imposed sanctions on Moscow after the outbreak of the Russia-Ukraine War. It remains to be seen whether today’s price dip is here to stay. The EIA monthly forecast will also indicate whetehr fears of a demand decline are well founded, paving the way for a concrete decision on oil production targets by the OPEC+.
Brent crude prices slipped below the $70-mark for the first time since December 2021, alleviating concerns about slippage in global fuel demand and potential oversupply in global markets. Biz News Business News – Personal Finance News, Share Market News, BSE/NSE News, Stock Exchange News Today
