Oil Prices Retreat Amid Global Demand Concerns

Oil prices retreated Tuesday, adding to previous month’s losses as Middle East tensions were overshadowed by weak global demand growth and concerns of increased supply.

By 09:20 ET (13.20 GMT), U.S. crude futures traded 0.9% lower at $67.58 a barrel, while Brent contract dropped 0.8% to $71.11 a barrel.

Israel Raids into Lebanon

Israel announced early Tuesday that its troops had begun “limited” raids against Hezbollah targets in Lebanon, risking further escalation in the oil-rich Middle East, potentially involving the U.S. and Iran.

Analysts at ING noted that the market is becoming increasingly numb to regional tensions, as despite nearly a year of conflict, there has been little impact on oil production.

China’s Economic Woes Weigh

The crude market faced struggles in September due to concerns over economic weakness in China, the world’s largest oil importer.

Recent data indicated a sharp decline in Chinese manufacturing activity for September, leading authorities to implement stimulus measures to foster 2024 growth towards a target of 5%. However, the private survey suggests more action is required.

Brent ended September down 9%, marking its third consecutive monthly decline and the largest drop since November 2022, with a total of 17% decline in the third quarter. WTI fell 7% last month and 16% for the quarter.

OPEC+ Set to Meet This Week

OPEC and its allies, known as OPEC+, are to hold their Joint Ministerial Monitoring Committee meeting on Wednesday. They plan to increase output by 180,000 barrels per day starting in December.

Currently, OPEC+ is cutting output by 5.86 million bpd, approximately 5.7% of global demand. The American Petroleum Institute is scheduled to release its weekly estimate of U.S. crude oil and fuel stockpiles for the week ending September 27.