Oil prices remained stable, hovering near their lowest levels in over a year, as risk-off sentiment in global markets dampened the impact of OPEC+ halting its planned production increase.
Brent crude, the international benchmark, closed at $72.69 per barrel, its weakest finish since June 2023.
The market initially rallied more than 2% on news that key OPEC+ members decided to pause the scheduled October hike of 180,000 barrels a day, but those gains quickly faded as sliding stock markets weighed on risk assets.
Crude’s sharp decline in recent weeks has been fueled by algorithm-driven trading, which pushed long positions in oil to historic lows.
Many traders, having already maxed out short positions, saw early gains as a chance to “buy the dip.”
However, experts like TD Securities’ Daniel Ghali urge caution, noting that short-covering activity could be modest.
“It won’t take much to spark some CTA short-covering activity over the coming week, but the scale of buying activity is expected to be modest at best,” said Ghali.
“This bodes well for a near-term bounce in prices, but downside pressures continue to grow in the medium term.”
OPEC+’s move follows weeks of steep price drops, driven by weak economic signals from the world’s biggest oil consumers, China and the U.S.
Additionally, Libya has made tentative progress in resolving its oil production stalemate, further complicating the market.
In the U.S., traders are also processing data showing a drawdown in crude inventories by 6.87 million barrels, surpassing expectations, but still not enough to offset broader market concerns.
Despite the recent turbulence, business leaders are keeping a close eye on these market fluctuations, as oil remains a critical factor in the global economy.
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