Oil posted its weakest quarter since late last year as concerns over the global economic slowdown increased, especially after an unprecedented attack on Saudi Arabia’s key energy facilities.
Brent futures have fallen 8.7% since the end of June after a brief rise earlier this month due to drone strikes on Saudi oil fields. Despite some uncertainties in the market, Saudi Aramco has already returned to producing more than 9,900,000 barrels per day (bpd) of crude oil. This faster-than-expected timetable coupled with the sale confirmed investors’ focus on weakening oil demand from slowing economic growth and the interstate trade war between the US and China.
” Oil supply remains quite adequate and the U.S. has a lot of oil”, said oil strategist RJ O’Brien.
Political tensions have eased somewhat since the September 14 attack on Saudi Arabia, where the parties appear to be taking a cautious approach. Saudi Crown Prince Mohammed bin Salman warned that the war between his country and Iran would lead to a “total collapse of the global economy” and that it should be avoided. He said he preferred non-military pressure to thwart Iranian ambitions. The United States and Saudi Arabia have accused Iran of committing the attacks, although the latter still denies it.
Meanwhile, Saudi Arabia has agreed to a limited ceasefire in several areas in Yemen, including the capital Sanaa, which is controlled by Iranian-backed Houthi rebels, a Yemeni government official said last week, further easing tensions in the region.
Brent crude for November settlement fell about $1.13 to $60.78 a barrel on the London-based Europe Futures Exchange. December’s contract was the most down by about $1.79 to $59.25. World crude oil traded at $6.71 for the West Texas Intermediate.
WTI for November delivery lost $ 1.84 to settle at $54.07 a barrel on the New York Mercantile Exchange. Prices have fallen 1.9% this month.
The oil market was also driven by the long clash between Washington and Beijing over trade and the side effects on economic growth. The world’s two largest economies will head to another round of high-level trade talks after the week-long national holidays in China from Oct. 1.
Investors are also looking to the weekly inventory data tomorrow, which may help boost prices.