However, analysts believe oil prices will overall hold steady this year at about $101: File Image/Pixabay
The first day of September saw a continuation of oil losses, this time with prices on Thursday falling to a two week low due to demand concerns as well as a broader commodities risk avoidance sentiment.
The demand concerns were said to be the outcome of investors' focus on tightening monetary policies globally in a bid to curb inflation, which they worry could also restrict economic growth and therefore impact oil consumption.
News that China's zero infection Covid policy led to the lockdown of megacity Chengdu added to Thursday's bearish sentiments.
Harry Altham, energy analyst, StoneX Group
There has been a wider shift away from risk assets in recent days
Harry Altham, an energy analyst for StoneX Group, pointed out that "There has been a wider shift away from risk assets in recent days and this has accelerated as bets are on" for a 75-basis-point rise in U.S. interest rates next month – a worry that in the previous session caused oil to suffer its third straight monthly decline.
West Texas Intermediate for October delivery settled down $2.94 to $86.61 per barrel, the lowest closing price since Aug. 16, while Brent for November settled down $3.28 to $92.36.
The significant slide in oil prices over the past few sessions may inspire the Organization of Petroleum Exporting Countries (OPEC) to make good on Saudi Arabia's warning that it will cut supplies in order to better align prices with fundamentals, and this in turn prompted Ole Hansen, head of commodity strategy at Saxo Bank, to remark, "That makes me believe the downside is limited ahead of Monday's [OPEC] meeting."
For the record, traders and analysts surveyed by Bloomberg think OPEC and its allies will decide to maintain current output levels when they meet on Monday: Daniel Hynes, an analyst at Australia & New Zealand Banking Group Ltd., rationalized this view by remarking "The market is tight," but he added that "if rhetoric doesn't stem the selling in crude oil, they may be forced" to take a stronger stance later on.
Haitham Al Ghais, secretary general for the cartel, has gone on record as expecting a "bullish" surge of demand from consumers eager to resume normalcy after two years of Covid restrictions.
In another survey of analysts released Thursday, this one conducted by Reuters, the consensus was that oil prices would hold steady through the second half of 2022 ($101 per barrel was cited as the common number) but would slip marginally next year to about $98, thanks to weaker-the-expected impact from the European Union's embargo on Russia crude.
In other oil related news on Thursday, India reportedly took over a niche of the Russian oil market previously dominated by China, with six vessels hauling ESPO crude to refiners in the South Asian nation last month.
Emma Li, analyst at Vortexa Ltd., said, "ESPO crude is now becoming a steady flow for India, a country that wasn't a big fan of the variety for years; the voyage to India will take longer, but the shipments might continue as long as the price stays attractive and there aren't real sanctions blocking the trade."