Oil prices opened lower this morning, with prices for both falling over 1% after China policy briefing over the weekend failed to offer new incentives to boost consumption in the country.

Brent crude fell to $77.50 per barrel early on Monday. US benchmark West Texas Intermediate (WTI) declined to $73.65 per barrel at the same time.

In China, the Consumer Price Index (CPI) rose 0.4% compared to the same period last year, while the Producer Price Index (PPI) decreased by 2.8%.

In September, the deflationary trend continued to be felt with the stagnation in consumer prices and the decline in producer prices.

The data supported the downward movement of oil prices, overcoming concerns that conflicts in the Middle East could disrupt global supply in the region, where most of the global oil reserves are located.

Meanwhile, the increasing expectations that inflationary pressures are losing their strength in the US, the world’s largest oil consumer, prevent oil prices from falling further.

In the US, the PPI remained unchanged on a monthly basis in September, below forecasts, while it increased by 1.8% on an annual basis, exceeding expectations.

Core PPI, which excludes volatile food and energy prices, increased by 0.2% month-on-month in September, in line with forecasts, while it rose by 2.8% year-on-year, above forecasts.

However, the prospect of escalations in the Middle East conflict has encouraged hedge funds to offload bearish bets in ICE Brent at the fastest pace in nearly eight years, ING commodities strategists said in a note.

Analysts said the latest positioning data shows that a fair amount of speculative buying in ICE Brent occurred over the last week.

ING said speculators added 123,226 lots to the net long position, a fourth consecutive week of long build-up, leaving them with a net long position of 165,008 lots as of last Tuesday.

Iraq’s state oil company SOMO said that the country has slashed oil production by 260,000 bbls/d to 3.94 million barrels per day (mbbls/d) in September, 60,000 below its OPEC+ oil production quota, as the country tries to better comply with the group’s effort to balance global crude oil markets.

Earlier, OPEC+ advised members like Iraq, Kazakhstan and Russia to fully implement output cuts pledged at the start of the year. OPEC is expected to publish its monthly oil market report, while the IEA will also publish its monthly oil market report tomorrow and its World Energy Outlook the following day.

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