U.S. crude oil drops below $70 amid OPEC+ uncertainty
- U.S. crude oil prices fell below $70 per barrel for the first time since December 2022, closing at $69.20.
- Weak manufacturing activity in the U.S. and China has raised concerns about an economic slowdown, impacting oil prices.
- Analysts suggest that despite current bearish sentiment, the market may recover, with predictions of Brent prices reaching $80 per barrel.
On Wednesday, U.S. crude oil prices fell more than 1%, dropping below $70 per barrel, marking the lowest level since December 13. This decline followed a significant plunge of over 4% on Tuesday, raising concerns about OPEC+'s upcoming production increases scheduled for October. The West Texas Intermediate October contract closed at $69.20 per barrel, while Brent's November contract settled at $72.70 per barrel, reflecting a year-to-date decline of 3.4% and 5.6%, respectively. The oil market is currently under pressure due to weak manufacturing activity in both the U.S. and China, which has reignited fears of an economic slowdown. Analysts have pointed to the situation in China as a major factor affecting oil prices this year. Despite OPEC+'s plans to increase production, uncertainty remains regarding the actual implementation of these plans, especially in light of potential political resolutions in Libya that could affect supply. Reports suggest that while eight OPEC+ members intend to increase production by 180,000 barrels per day, the group may reconsider this decision based on market conditions. The overall sentiment in the oil market is bearish, as indicated by analysts who note that the market reaction to supply news reflects a lack of confidence among investors. Despite the current pessimism, some analysts believe that the market is overly negative and predict a recovery in Brent prices to around $80 per barrel in the coming months, driven by the fundamental undersupply of oil inventories, which have been declining since May, even amid weak demand from China.