International Oil Prices Fall for 2 Consecutive Weeks Due to War Premium Drop and Weak Indicators

New York crude oil prices fell as the war risk premium decreased and U.S. economic indicators showed weakness.

On the 3rd (local time) at the New York Mercantile Exchange, the December delivery West Texas Intermediate (WTI) crude oil price closed at $80.51 per barrel, down $1.95 (2.36%) from the previous session. Oil prices fell by $5.03 (5.88%) this week alone, marking a two-week consecutive decline. The two-week drop rate reached 9.28%.

Oil prices came under downward pressure as the U.S. economic indicators released that day showed weakness. Additionally, concerns about supply eased significantly as the war between Israel and Hamas did not escalate to the broader Middle East, including Iran.

According to the U.S. Department of Labor, nonfarm payroll employment in the U.S. increased by 150,000 in October, falling short of the 170,000 increase forecasted by experts surveyed by The Wall Street Journal (WSJ). This was also significantly below the previous month's increase of 297,000. The unemployment rate rose to 3.9% from 3.8% in the prior month.

The service sector also showed slightly weaker-than-expected performance. The Institute for Supply Management (ISM) reported that the U.S. non-manufacturing (service) Purchasing Managers' Index (PMI) for September was 51.8, down from 53.6 in the previous month. This figure also missed the market expectation of 53.0.

The October service sector PMI compiled by S&P Global recorded 50.6, slightly up from 50.1 in September but slightly below the preliminary estimate of 50.9.

Weak economic indicators lower U.S. Treasury yields, easing concerns about the economy. However, if the indicators deteriorate rapidly, it could instead weigh on crude oil demand.

Investor attention on the war between Israel and Hamas continues. The U.S. officially proposed a temporary ceasefire to Israel, but Israel immediately rejected it, leaving the situation unresolved. Furthermore, Hezbollah, the Lebanese armed group supporting Hamas and attacking Israel, mentioned the possibility of a full-scale war with Israel, increasing the risk of escalation.