Oil prices saw a decline in Asian trade in morning trading hours on Wednesday, after falling by more than 3 percent in the previous session.
Brent crude futures for February saw a slight dip of 1 cent to $73.23 a barrel, while US West Texas Intermediate crude futures for January dropped 2 cents to $68.59 a barrel in the morning trading hours.
Oil prices plummet amid oversupply worries
The continued fall led to oil prices hitting a six-month low, said to be on account of concerns on oversupply and weaker demand.
The crude market remained unimpressed even after the Organization of Petroleum Exporting Countries and allies (OPEC+) announced production cuts for 2024.
Factors such as record-high US production, a slowdown in Chinese demand, and uncertainty over the US Fed’s monetary policy also contributed to the downward trend in oil prices, media reports said.
Market analysts said overnight trade saw a decline in the market due to higher-than-expected US inflation rates for November.
This has strengthened the belief that the Federal Reserve will not cut interest rates early next year, which could negatively impact consumption.
ANZ analysts have reported that the weekly average of Russian crude oil exports has surged to the highest level since July.
This has compounded the issue of oversupply and raised doubts about the recent output cut agreement by OPEC+.
The US Energy Information Administration has also raised its forecast for oil supply in 2023 by 300,000 barrels per day to 12.93 million barrels per day from its previous report, according to the most recent Short-Term Energy Outlook report.
Analysts said the bearish outlook means that oil is expected to continue its downward trend this week, making it seven straight weeks of declines.
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