Oil fell to a three-month low as a forecast drop in US gasoline consumption added to a growing array of indicators suggesting the demand outlook is worsening.
West Texas Intermediate edged lower to near $77 a barrel after plunging 4.3% on Tuesday, while global benchmark Brent was near $82. American gasoline demand will drop to a 20-year low next year on a per-capita basis, according to a US government report, with prices at the pump and inflation likely causing a reduction in discretionary driving.
Oil has fallen sharply over the last three weeks as the Israel-Hamas war-risk premium evaporated and the demand outlook deteriorated. There are worries over the state of the economy in China, the world’s biggest importer, and fresh doubts on whether the Federal Reserve has finished tightening. On the supply front, Russian shipments are running near a four-month high.
The growing bearishness is being reflected in the futures curve. WTI’s prompt timespread is now just 11 cents a barrel in backwardation, a bullish structure where near-term cargoes are more expensive than later-dated ones. That’s down from more than $1 in backwardation on Oct. 23.
However, OPEC+ said it was still positive on the demand outlook as it prepares for its next ministerial meeting. Saudi Arabia and Russia may decide whether to extend voluntary supply cuts into 2024 at the gathering in the final weekend of November.
Terminal users can click here for more on the Israel-Hamas War.
To get Bloomberg’s Energy Daily newsletter into your inbox, click here.
