Crude oil prices are headed for their fourth consecutive losing week after slumping by some 5% on Thursday to the lowest in four months.
The reason for the latest daily slump was weak economic data from the United States and China, Reuters reported, noting that both Brent and WTI had sunk to the lowest since July.
"The mood is negative, the charts are negative," Phil Flynn, an analyst at Price Futures Group, told Reuters. "It's going to take something to change that mood, and until then people will ride it down until they realize it's overdone."
The latest cause for that mood was retail sales data from the U.S., which showed the first monthly decline in sales since spring, and a slowdown in Chinese refinery activity, even though that was neither surprising nor mysterious. Refiners simply ran out of fuel export quotas.
Meanwhile, however, the U.S. Energy Information Administration reported a build in crude oil inventories for the week to November 10, which added to the bearish sentiment, especially as it came after a sizeable weekly build of almost 14 million barrels two weeks earlier.
According to Bloomberg, oil has sunk into a bear market. The report cited the International Energy Agency’s latest Oil Market report that said supply growth was stable, especially among non-OPEC producers.
Analysts expect this to pressure OPEC into acting to curb supply even more in a bid to prop up prices.
“We believe that OPEC will ensure that Brent oil prices end up in a $80-to-$100 range in 2024 by ensuring a moderate deficit and leveraging its pricing power,” Goldman Sachs analysts wrote in a note.
ING analysts, meanwhile, noted that The US administration said that it would enforce oil sanctions against Iran following renewed tensions in the Middle East.”
They added that if sanctions are indeed enforced more tightly, they could lead to the loss of between 500,000 bpd and 1 million bpd of Iranian oil, which would keep global supply tight through 2024.
By Irina Slav for Oilprice.com
Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.