On Tuesday, crude oil prices in the United States dropped below $78 a barrel, marking their lowest point since July. This decline was spurred by discouraging global economic data, which overshadowed concerns about the potential escalation of the Israel-Hamas conflict into a wider regional turmoil.
West Texas Intermediate witnessed a significant plunge of $3.45, accounting for a 4.3% decrease, settling at $77.37 per barrel. Similarly, Brent crude experienced a fall of $3.57, representing a 4.2% drop, settling at $81.61 per barrel. These price points for both variants marked their lowest levels since July.
The downward trend in oil prices was influenced by the release of a mixed bag of economic data from China. Despite an increase in crude oil imports in terms of both volume and value during October, China’s overall exports experienced a steeper decline than expected, indicating a slowdown in global demand.
The country’s exports plummeted by 6.4% in U.S. dollar terms compared to the same period last year, a more drastic drop than the 3.3% predicted by a Reuters poll.
China has been grappling with a consistent decline in exports over the past six months, partly due to higher interest rates exerting downward pressure on the global economy. Neel Kashkari, the President of the Minneapolis Federal Reserve, tempered expectations on Tuesday about the possibility of the U.S. central bank cutting rates, emphasizing the necessity of bringing inflation down to 2% within a reasonable time frame.
Kashkari told Bloomberg Television, “We have to get inflation back down to 2% over a reasonable period of time. Ultimately, the economy will tell us how much is needed to get there, and I just don’t know.”
Despite initial price boosts triggered by Saudi Arabia’s and Russia’s oil output cuts earlier in the week, the impact of this news was overshadowed by China’s economic data. Riyadh and Moscow announced on Sunday that they would continue with these production cuts at least until the end of the year.
Oil prices had initially surged in the week following Hamas’ destructive terrorist attacks on Israel, owing to concerns about the conflict potentially disrupting oil supply and leading to broader regional instability. However, since mid-October, prices have been on a downward trajectory as immediate fears of the conflict spreading have somewhat eased.
