International oil prices plunged more than 5% amid growing concerns over an economic slowdown due to prolonged high interest rates.
On the 4th (local time) at the New York Mercantile Exchange, the closing price of November delivery West Texas Intermediate (WTI) crude oil futures was $84.22 per barrel, down $5.01 (5.6%) from the previous trading day's close. This is the lowest level in over a month since August 31.
WTI prices had closed at $93.68 per barrel on October 27, reaching the highest level in 13 months since August last year. However, prices have been declining since then.
At the London ICE Futures Exchange, November Brent crude oil futures also closed at $85.81 per barrel, down $5.11 (5.6%) from the previous trading day's close.
With expectations that high interest rates may persist longer than anticipated and growing concerns that an economic slowdown will reduce oil demand, oil prices have been on a downward trend.
On the same day, the Saudi Ministry of Energy issued an official statement announcing that production cuts will continue until the end of the year, but the oil market reacted more sensitively to concerns about the economic slowdown.
The U.S. Energy Information Administration (EIA) reported in its weekly report that U.S. crude oil inventories decreased by 2.2 million barrels from the previous week to 414.1 million barrels. It also forecasted an increase in oil production due to investment activities by U.S. energy companies.
The EIA predicted that due to production cuts by Saudi Arabia and other OPEC+ member countries, WTI prices will remain above $80 per barrel until the end of 2024, and that the U.S. will be the main driver of global oil production growth.
Callum McPherson, an analyst at Investec, said, "Market attention, which was previously focused on short-term supply disruptions, has now shifted to the implications of prolonged high interest rates, the resulting macroeconomic environment, and discussions at the November OPEC+ meeting."
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