Brent ended down 1.97% at $94.29 and WTI ended down 1.95% at $89.35.
Oil prices experienced a second session of decline on Tuesday, undermined by new health confinements in China and revised global economic forecasts down, raising fears of a slowdown in demand.
The price of a barrel of Brent from the North Sea for delivery in December fell 1.97%, to close at 94.29 dollars.
The barrel of American West Texas Intermediate (WTI), with maturity in November, dropped 1.95%, to 89.35 dollars.
“There is some risk aversion fueled by concerns that the US and global economy will slow down and cool the market” and demand, commented Bart Melek of TD Securities.
The International Monetary Fund (IMF) on Tuesday lowered its global growth forecast for 2023 from 2.9% to 2.7%, still strangled by inflation and general monetary tightening.
In China, restrictions have been ordered in Fenyang, a northern city, as well as in Xi’An, in the center of the country, while several establishments have been closed in downtown Shanghai.
A column, published Tuesday in the People’s Daily, state media, said that China’s zero-Covid policy was “sustainable” and that it should be continued to stabilize the country’s economic activity.
For Mr. Melek, this maintenance of a hard line in the fight against the coronavirus limits the positioning of operators on the rise.
For two sessions, the market has been in a technical decline after last week’s surge, following the decision by the Organization of the Petroleum Exporting Countries (OPEC) and its allies of the OPEC+ agreement to cut production by two million barrels per day.
For Amarpreet Singh, of Barclays, the effect of this announcement has now been digested. Barclays estimates that the real contraction in volumes of the OPEC + group to be expected from November is 900,000 barrels per day, less than the official figure of two million barrels.
This reduction pushed prices up by about $11 a barrel, he said.
President Joe Biden continues to react to the shock OPEC+ announcement and is now ready to “reassess” the United States’ relationship with Saudi Arabia.
According to the Wall Street Journal, the US government tried to dissuade the kingdom from cutting cartel production ahead of last week’s meeting, but the Saudis refused.
The Biden administration had notably offered to start buying oil on the market to replenish its strategic reserves if prices fell to $75 a barrel, but Saudi Arabia did not follow through.
In response to the production cut, the US government has pledged to draw ten million additional barrels from its reserves in November, in an attempt to relieve prices.
“We don’t think the use of strategic reserves helps lower prices, because prices depend on perennial supplies,” Amarpreet Singh said. “However, this use is not tenable” in the medium term.