European Propylene Market Bothered by Rising Crude Oil Value, USA Maintains Stability
- 11-Sep-2023 5:30 PM
- Journalist: Stella Fernandes
Oil prices experienced a decline on Monday, following a period of surging prices driven by fresh output cuts from Saudi Arabia and Russia, which had propelled them to 10-month highs.
Last week, Saudi Arabia and Russia jointly declared an extension of their voluntary supply cuts, amounting to a combined reduction of 1.3 million barrels per day (bpd), continuing until the end of the year.
At 0848 GMT on Monday, Brent crude registered a decrease of 40 cents, representing a decline of 0.44%, settling at $90.25 per barrel. Simultaneously, U.S. West Texas Intermediate (WTI) crude oil dipped by 65 cents, marking a decrease of 0.74%, and closing at $86.86.
While concerns over Chinese economic activity had been at the forefront of investors' minds last week, the focus on Monday appeared to shift towards demand factors. The upcoming release of monthly reports by the International Energy Agency and the Organization of the Petroleum Exporting Countries was anticipated, with these reports expected to shed light on key demand drivers.
Mukesh Sahdev, the head of downstream and oil trading at Rystad Energy, emphasized that the true impact of the Saudi-led output cuts would become more apparent by year-end. This timing coincides with the conclusion of refinery maintenance and the subsequent ramp-up in production. He estimated that refinery outages would reach their peak at 10 million bpd in October.
While monitoring economic factors, market participants looked to the European Central Bank (ECB), which was scheduled to announce its monthly interest rate decision during the week. In parallel, the United States was set to release August consumer price index (CPI) data on Wednesday, a crucial economic indicator.
Naeem Aslam, from Zaye Capital Markets, underscored the importance of the U.S. inflation figures, emphasizing, "This week, the most crucial economic indicator in the United States will be the inflation data, which is expected to have an impact on a wide range of financial assets, including stocks, foreign exchange markets, bonds, and commodity prices."
In summary, the prices of oil exhibited a retreat on Monday, reversing a trend that had seen them surge to 10-month highs following output cuts by Saudi Arabia and Russia. The market's attention had shifted towards demand factors, with forthcoming reports from the IEA and OPEC expected to provide insights into key drivers of demand. Additionally, economic events such as the ECB's interest rate decision and U.S. CPI data were poised to impact market sentiment and influence various asset classes, including commodities such as oil.