Cooling Demand: Oil prices broke August lows and are down 4% amid concerns of slowing demand. Can crypto outperform if the economy continues to worsen?
Oil prices sink on 'demand destruction' worries, weak China exports https://t.co/KMjwqvXbss by @ines_ferre
— Yahoo Finance (@YahooFinance) November 7, 2023
While Chinese oil imports have shown signs of growth, exports contracted faster than expected. Oil prices rebounded in early October in response to renewed conflict between Israel and Palestine, but they’ve been on the decline since the 20th of last month.
Dennis Kissler, a senior vice president of BOK Financial’s energy and agriculture trading desk, wrote to Yahoo Finance that “the market continues to be more focused on demand destruction than escalating war tensions.”
Chinese-based oil refiners are expected to cut production in November and December, thanks to margin compression resulting from a lack of demand for refined oil products amid high oil prices.
Slowing oil exports and weakening demand from refiners spell trouble for broader markets, as a lack of demand for oil products, a major production input, indicates a struggling economy.
Despite hopes that the masses will flock to crypto if additional stimulus (read: money printing) is needed to prop up an economy in distress, it remains to be seen whether the asset class can decouple from broader markets during a period of prolonged economic contraction. Real estate certainly didn’t serve as a hedge against dollar debasement in 2008…