Due to new worries about demand, oil prices drop 3% to 2-1/2 month lows

 Due to new worries about demand, oil prices drop 3% to 2-1/2 month lows

As of 11:34 a.m. ET (1634 GMT), Brent oil futures had down $2.53, or 3%, to $82.65 a barrel, while U.S. West Texas Intermediate crude had dropped $2.47, or 3.1, to $78.35 a barrel.

On November 7, oil prices dropped almost 3% to their lowest point since late August due to growing market skepticism about interest rate reduction and conflicting Chinese data regarding demand.

As of 11:34 a.m. ET (1634 GMT), Brent oil futures were down $2.53, or 3%, to $82.65 a barrel, while U.S. West Texas Intermediate crude was down $2.47, or 3.1%, to $78.35 a barrel.

Both contracts closed below $84 a barrel for the first time since the assault on Israel by Hamas Islamists on October 7, and both reached their lowest points since August 25.

The differential between front-month loading Brent futures and those loading in six months was also at a 2-1/2-month low, suggesting that market players are not as worried about the present shortages in supplies.

"Traders will remain on a state of alert for signs of a wider conflict forming in the (Middle East) region that might interrupt supplies, but it seems those fears are calming down," Craig Erlam, an OANDA analyst, said.

China's demand for crude oil increased sharply in October, both year over year and month over month, while its overall shipments fell more quickly than anticipated.

"The data signals a continuing decline in the Chinese economy driven by deteriorating demand in the country's greatest export the final destination. the West," Fiona Cincotta, an analyst with the City Index, said

Refiners located in China are anticipated to reduce their crude run between November and December, which may restrict oil consumption and further price drops.

Global equities, which often move in lockstep with oil, cooled down on Tuesday as investor excitement about a peak in interest rates globally subsided. For holders of foreign currencies, oil has become more costly due to the U.S. dollar's little increase from its recent lows. [GLOB/MKTS]

Neel Kashkari, the president of the Minneapolis Federal Reserve, dashed expectations of an early rate decrease on Tuesday by stating that more action may be needed by the US central bank to return inflation to its objective of 2%. The Fed Chair Jerome Powell is scheduled to appear on Wednesday and Thursday, and investors are determined for his remarks.

"I think traders are becoming more and more concerned about the possible outcome of decreasing demand next year as high interest rates continue to devour," Erlam said.

The markets are also anticipating a wider agreement within the OPEC+ producer group, as well as whether Saudi Arabia and Russia are prepared to voluntarily limit output beyond the end of the year.

On Tuesday, around 2000 GMT, API industry data about U.S. oil stocks is anticipated. [S/API]