Oil dips persist: demand outlook signals growing concerns
Recent oil price dips, geopolitical tensions, and uncertainties related to Chinese exports create an intricate economic environment.
As Brent crude approaches $82 a barrel, Saudi Arabia and Russia announce commitments to maintain production cuts, defying the risk of further declines.
Learn more about the challenges and strategies that are shaping the present of the global oil sector.
Oil prices have hit new two-and-a-half-month lows, and rising tensions in the Gaza Strip could further limit demand and exacerbate the price decline. Also fueling fears of weakening global demand are Chinese data showing a larger-than-expected drop in total exports of goods and services in the world's second-largest economy, and some uncertainties about the end of the Federal Reserve's tightening monetary policies. Brent crude, the global benchmark for oil prices, traded below $82 a barrel after a 4.2 percent drop during the week.
On the supply side, Saudi Arabia and Russia, the world's largest oil exporters, have confirmed their willingness to continue production cuts through the end of 2023 to prevent prices from falling further. After production cuts during the summer, oil prices had risen to nearly $98 a barrel in September before trading back around $85 a barrel last Friday.
Brent Crude Oil (USD), Five year weekly chart
OPEC+, the world's largest organization of oil-producing countries, led largely by Saudi Arabia, has been cutting production since the beginning of the year in a preemptive effort to maintain market stability and prevent further declines in oil prices. Saudi Arabia announced that it will continue to reduce production by 1 million barrels per day compared to 2022, thus producing about 9 million barrels per day until the end of the year. Russia also confirmed its decision to reduce its oil exports by 300 thousand barrels per day until the end of the year.
WTI Light Sweet Crude Oil Future (in USD), Five year weekly chart
Risks
This information is neither an investment advice nor an investment or investment strategy recommendation, but advertisement. The complete information on the trading products (securities) mentioned herein, in particular the structure and risks associated with an investment, are described in the base prospectus, together with any supplements, as well as the final terms. The base prospectus and final terms constitute the solely binding sales documents for the securities and are available under the product links. It is recommended that potential investors read these documents before making any investment decision. The documents and the key information document are published on the website of the issuer, Vontobel Financial Products GmbH, Bockenheimer Landstrasse 24, 60323 Frankfurt am Main, Germany, on prospectus.vontobel.com and are available from the issuer free of charge. The approval of the prospectus should not be understood as an endorsement of the securities. The securities are products that are not simple and may be difficult to understand. This information includes or relates to figures of past performance. Past performance is not a reliable indicator of future performance.
The value of the products can fall significantly below the purchase price due to changes in market factors, especially if the value of the underlying asset falls. The products are not capital-protected
Investors in the products are exposed to the risk that the Issuer or the Guarantor may not be able to meet its obligations under the products. A total loss of the invested capital is possible. The products are not subject to any deposit protection.
Due to the leverage effect, there is an increased risk of loss (risk of total loss) with leverage products, e.g. Bull & Bear Certificates, Warrants and Mini Futures.
If the product currency differs from the currency of the underlying asset, the value of a product will also depend on the exchange rate between the respective currencies. As a result, the value of a product can fluctuate significantly.