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Oil Prices Fall on Demand Fears, Market Volatility

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On Thursday, the prices of oil witnessed a fall by 1 to 2 percent. This was amid the volatility in the currency as well as the stock markets along with the concerns that in 2019 the fuel demand will also be cut down exactly like the surging supplies of crude because of the economic slowdown.

The West Texas Intermediate of the United States which is abbreviated as WTI, witnessed a fall of $1.01 percent which accounts to 2.2 percent. This was since their last settlement at 5:50 GMT of $45.53.

The International Brent crude futures witnessed a decline of 76 cents reaching $54.15 per barrel. This accounted to a decline of 1.4 percent.

Chart showing moving of the WTI Crude Oil

Source: Brookings

Reasons behind the happening

On Thursday, according to Reuters, the respondents to a survey told it that, in the physical markets of oils, Saudi Arabia which is the top exporter of oil has been expected to cut the prices in February for the crude grades which are heavy and are sold to Asia for a price that is up to 50 cents per barrel because of the fuel oil margins which are weak.

Phillip Futures who is brokerage that in Singapore based had stated that the fears of the growth of economy as well as earnings in the future has continued to be the main reason for all the jitters that has been caused.

After the iPhone producer, Apple had cut down its forecasts of the sales in the wake of which the markets have witnessed a roil. This was because the U.S. dollar had a slump of more than 3 percent against the yen of Japan.

Tim Cook, the chief executive of Apple had stated that they could not foresee the magnitude of the deceleration of the economy. This was particularly in the Greater China according to Cook.

Supply of crude through pipelines

Source: WSJ

Investors aren’t happy

The investors are becoming nervous because of the slowdown in the economy of China along with the turmoil in the markets of stocks as well currency. This is inclusive of the oil markets.

Philip Futures had stated that the slowdown of the economic growth tends to have a negative impact on the prices of oil. This is because the markets are now eyeing the potential for the demand of petroleum to be softer.

Talking as per the fundamentals, the markets of oil have now started experiencing pressure which is because of the surge in the supply. This is similar to the slowing of the demand growth amidst the turmoil in the market.

Source: Reuters, Brookings

 

Ketakee Srivastava
I am an amateur content writer, who is currently pursuing a Masters in Finance from ICFAI Business School. In this highly volatile Business Market, I find no better way to keep myself updated than to write about it and reflect my own thoughts as words.

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