A rise in oil prices was observed during early trading in Asia on Oct 1. The upside can be attributed to a decline in output levels at some of the large producers like the United States, Russia and Organization of the Petroleum Exporting Countries (OPEC) in the third quarter.
According to a Reuters’ survey, OPEC’s output slipped to the lowest monthly total production level since 2011. It came in at 28.9 million barrels per day (bpd) in September, down 750,000 bpd from the revised figure of August.
There was a drop in production levels in the United States and Russia in July and September. In comparison to 11.29 million bpd in August, Russia’s output fell to 11.24 million bpd during Sep 1-29. Furthermore, per a U.S. Energy Information Administration monthly report, a decline in federal offshore Gulf of Mexico’s production levels resulted in a 276,000-bpd reduction in U.S. crude oil output totaling 11.81 million bpd in July (read: ETFs in Focus as Oil Spurts on Rising Middle East Tensions).
Will the Trend Stay?
Oil prices are exposed to waning demand due to slowing global economic growth and the Sino-US trade spat. A slowdown in global economic growth is being observed with Trump making rampant attacks to defend his America First agenda. This has resulted in weaker currencies, soft economic growth and slashed forecasts for countries at the receiving end of his trade-related policies. The Eurozone economy has been struggling with declining demand for goods and services largely due to trade war and Brexit issues. Moreover, economic impact of the Sino-US trade war resulted in the fastest decline in Japanese manufacturing activity in seven months in September.