Crude prices slump to $86 a barrel on demand concerns, hit one-month low

Crude oil prices have been trading around $90 per barrel in recent months due to tighter supply in oil markets

Crude oil prices fell sharply by over $3 a barrel overnight and hit the $86-a-barrel mark on October 5 as macroeconomic headwinds led to demand concerns. The fall in prices came despite announcements by Saudi Arabia and Russia to continue output cuts till December.

Prices fell 5 percent overnight and plummeted by 8 percent through the week, pushing crude prices to a one-month low, in stark contrast to the bullish trends witnessed earlier in the year.

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Oil prices had previously seen a remarkable 9 percent surge in September, contributing to a 27 percent gain in Q3. However, the recent drop in prices raised questions about the sustainability of this upward momentum.

Crude prices have been trading around $90 per barrel in recent months due to tighter supply in oil markets. Major oil-producing nations, including Saudi Arabia and Russia, have cut supplies to support crude oil prices.

The Energy Information Administration (EIA) added to the bearish sentiment by reporting a substantial increase of 6.5 million barrels in gasoline stocks, the largest build in two years. Consequently, gasoline prices tumbled to a nine-month low, plunging by 17 percent in three weeks.

One significant development on the horizon is Russia's potential lifting of the diesel ban in the near term, which could have a notable impact on the global energy landscape. Meanwhile, OPEC+ decided to maintain its existing output policy, despite recent market turmoil.

Meanwhile, US crude stocks experienced a decline of 2.2 million barrels and economic concerns emerged as the European Union's economy contracted in Q3, and the US service sector showed signs of slowing in September.

In this tumultuous year for crude oil prices, the year started at $82 per barrel, dipped to $70 in June, spiked to $96 in September, and now stand at $85 in October. These fluctuations are indicative of the ongoing challenges and uncertainties facing the global energy market, with various factors at play, from supply and demand dynamics to geopolitical tensions and economic conditions.