Oil prices rally from 2021 lows amid global economic uncertainty

Oil prices have rebounded from their lowest levels since 2021, following a significant weekly downturn that brought futures near the brink of being oversold. This week, the market's focus is sharply on three pivotal reports that could provide clarity on the demand forecasts.

Brent crude oil, which serves as a global benchmark, advanced to approximately $72 per barrel after shedding nearly 10% of its value last week.

Meanwhile, West Texas Intermediate crude breached the $68 mark. These recent losses in oil prices occur amid indications of decelerating economic growth in the United States and China, which pose a threat to demand during a period marked by an oversupply in the markets.

This downturn has driven the 14-day Relative Strength Index down to 31 points, signaling that the recent price drops might have been overly swift and steep.

Oil demand forecasts

This week offers traders extensive market insights as the three largest forecasting agencies—OPEC, the U.S. Energy Information Administration, and the International Energy Agency—release monthly reports. Additionally, the Asia-Pacific Petroleum Conference, a significant industry event, will take place in Singapore.

Eight OPEC+ member countries have agreed to extend their additional voluntary cuts for another two months, until the end of November, according to today's statement from the oil alliance.

Over the past three weeks, oil prices have declined as market sentiment turned more pessimistic, driven by a broad sell-off in commodities and stocks that has alarmed investors.

The markets have also experienced a general weakness in oil derivatives, including American gasoline and European diesel. This prompted the "OPEC+" alliance to delay easing production restrictions for two additional months.

Aramco oil prices

Despite Saudi Arabia's recent decision to lower the price of its primary crude oil for the Asian market next month, oil prices have risen at the start of this week, reflecting subdued demand expectations.

Saudi Aramco, the state-owned entity, has cut the official selling price of its "Arab Light" crude for Asian buyers by 70 cents to $1.30 per barrel compared to the regional benchmark, according to a Bloomberg-reviewed price list.

The Kingdom has reduced the price premium for its oil sales to its primary market in Asia next month, amidst mounting concerns about dwindling demand.

The spot price differential for Brent crude, which refers to the difference between the nearest two contracts, stood at 38 cents per barrel under "backwardation" conditions. Although this pattern remains positive, the differential was over a dollar just two weeks ago.