October 1, 2024 (Globalinvestorideas.com Newswire) Globalinvestorideas.com, a go-to platform for big investing ideas releases market commentary from Samer Hasn, Senior Market Analyst at XS.com.
Crude oil prices are down 1% today for the two major benchmarks and are once again nearing their lowest levels this year.
Oil’s losses come as market sentiment around future demand for crude appears to be faltering despite China’s latest economic support packages. Markets also seem not concerned about the implications of the escalating tensions in the Middle East for global energy supplies.
Even after a fresh round of support for China’s real estate sector on Sunday, oil prices have been on the decline in both yesterday’s and today’s session – despite the CSI 300’s massive 8% surge today. The effectiveness of these support packages and the time horizon required for their impact to materialize remain questionable. Furthermore, multiple reports from the Wall Street Journal, including an editorial, have emphasized that fiscal support, consumer stimulus, and economic reforms hold greater significance than monetary interventions and stock market support.
This also coincides with the lackluster performance of advanced economies. Earlier in the week, we saw a sharp and unexpected contraction in industrial production in Japan by 3.3% year-on-year in August. The Eurozone economy continues to show negative signs about the performance of economic activities, which are mixed with the collapsed sentiment among investors and companies and the lack of hope for a return to growth anytime soon, as shown by the latest series of surveys.
While the labor market data from the United States that is flowing in this week may help to reinforce the decline in crude prices if it indicates further signs of weakness in the economy, which increases concerns about the impossibility of achieving a soft landing in inflation.
Even with all these negative factors on the demand side, supply is set to increase further later this year with the expectation that OPEC+ will start to reduce its crude production restrictions and increase it by 180 thousand barrels per day.
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