Concerns Over Demand Keep Oil Prices Near $71

Oil prices stabilized on Thursday in international markets above the $71 level, as traders are worried about a potential slowdown in demand in the context of U.S.-China trade tensions.

>>>Oil Prices Drop Towards $74 Due to Concerns Over Chinese Demand

The price of a barrel of oil in the London market rose by 39 cents compared to the previous closing, amounting to $71.15. Yesterday, it closed trading down $1.96.

In the U.S. market, a barrel was traded today at nearly unchanged price compared to the previous closing, at $65.15. Yesterday, it closed trading down $2.22.

Markets were shaken yesterday by data showing a jump in crude oil inventories in the U.S. last week, by 6.8 million barrels, despite a high level of refining activity, raising concerns about fuel demand.

Sales in broader industrial commodity markets, such as copper, also weighed on the market.

Demand is in focus due to U.S. and Chinese tariffs that could harm global economic growth.

The crisis of the Turkish lira is also causing headaches for markets, reflecting on the currencies of other emerging economies, reverberating through stock, bond, and commodity markets.

“The growth story is now more or less a story of growth in the U.S. The rest of the world is no longer participating in that game,” states Ole Hansen from Saxo Bank.

“It also actually shows why there is concern about supply in commodity markets, in the context of sanctions on Iranian oil and the strike of miners in Chilean copper mines, has quickly replaced the focus on demand,” adds Hansen.

On the supply side, official U.S. data released yesterday showed that crude oil production increased last week by 100,000 barrels per day, to 10.9 million barrels per day.

“This increase certainly did not help market sentiment,” analysts from Dutch bank ING explained in a note to clients after the report was released.

>>>Oil Prices Climb to $80

Support for prices is provided only by the announcement of U.S. sanctions on Iranian oil exports, which are expected to be implemented in November. Major Iranian clients such as India, South Korea, and Japan have already begun to reduce orders, notes Reuters.

Separately, the Organization of the Petroleum Exporting Countries (OPEC) announced this morning that the price of a barrel of its reference basket of oil was $69.77 on Wednesday, which means it fell by $1.56 compared to the previous day.