Oil prices experienced a sharp decline, plummeting over $3 per barrel on Thursday, as concerns over increased U.S. supply and apprehensions about diminished energy demand in China rattled investor confidence. The downturn persisted from the previous session, reflecting a response to indicators pointing towards a surge in supply in the United States and an anticipated decline in energy consumption in China.
Brent futures saw a significant drop of $2.60, translating to a 3.2% decrease, settling at $78.58 per barrel by 1526 GMT. Concurrently, U.S. West Texas Intermediate crude (WTI) faced a reduction of $2.65, marking a 3.5% decline, bringing it down to $74.01. The previous session had already witnessed both benchmarks slipping by more than 1.5%.
Adding to the concerns, WTI’s front-month contract traded below the price for the second month, a market structure identified as contango. These developments highlight the fragile balance between global supply and demand, with the threat of growing US crude output and China’s energy needs threatening oil price stability. Investors are keeping a tight eye on these developments, understanding their potential impact on the larger economic picture.
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