Prices for crude oil dropped on Tuesday as signs of poor demand for the commodity and abundant supply continued to put pressure on the prices.
German’s August industrial output dropped to the steepest rate from January 2009, as indicated by the economy ministry data on Tuesday, putting pressure on European equities and pointing to oil’s weak demand.
Reuters quoted CMC Markets chief market analyst, Michael Hewson as having said, “There is stagnation in Europe and China is slowing down. It’s going to be very difficult for the oil price to rally on that basis.”
The bearish outlook was further supported by the low forecast for 2014 and 2015 global oil demand by the US Energy Information Administration (EIA).
According to Fox Business, Brent dropped to $92.49 per barrel by 30 cents. The global benchmark stood at a $91.25 low on Monday before recovering in late trading. US crude dropped 11 cents to $90.23.
Bijan Zanganeh, Iran Oil Minister said that Organization of the Petroleum Exporting Countries (OPEC) does not have plans to hold an emergency meeting to talk about the latest declines in oil prices.
Oil ministers from OPEC are scheduled to hold a meeting in Vienna on November 27 to consider altering their 30 million barrels a day output target.
Commerzbank senior oil and commodities analyst, Carsten Fritsch said, “Until OPEC makes some moves to reduce supply, oil prices are likely to remain under pressure.”
Last week, US crude stocks increased by 1.4 million barrels to 358 million barrels, ahead of the Tuesday report of the American Petroleum Institute.
US output for crude oil has jumped more than 3 million barrels per day since 2010, during a time when the growth in oil demand has been depressed by sluggish global economic growth.
Oil market historian and vice chairman of HIS, Daniel Yergin said, “What is happening in oil markets represents the impact of this tremendous surge in US oil production.”