Oil down 2% as China demand woes erase last week’s gains
CHIGOZIE AMADI
Oil prices declined about 2% on Monday, wiping out all of last week’s gains, after China oil imports fell for the fifth month, stoking concern about fuel demand as OPEC cut its 2024 and 2025 global oil demand growth view again.
China’s stimulus plans also failed to inspire investor confidence while markets remained on edge about potential Israeli attacks on Iranian oil infrastructure.
Brent crude futures were down $1.50, or 1.9%, at $77.54 per barrel by 1213 GMT, while U.S. West Texas Intermediate crude futures fell $1.53, or 2%, to $74.03 per barrel. Brent gained 99 cents last week, while WTI climbed $1.18.
OPEC on Monday cut its forecast for global oil demand growth in 2024 and also lowered its projection for next year, marking the producer group’s third consecutive downward revision.
China, the world’s largest crude oil importer, accounted for the bulk of the 2024 downgrade as OPEC trimmed its growth forecast for the country to 580,000 barrels per day (bpd) from 650,000 bpd.
China’s crude imports for the first nine months of the year were down nearly 3% from last year to 10.99 million bpd, data showed.
Declining Chinese oil demand from the growing adoption of electric vehicles (EV), as well as slowing economic growth following the COVID-19 pandemic, has been a drag on global oil consumption and prices.
China’s deflationary pressures also worsened in September, according to official data released on Saturday. A press conference the same day left investors guessing about the overall size of a stimulus package to revive the fortunes of the world’s second-largest economy.
“China’s monetary stimulus measures failed to stimulate and the weekend’s pledge from the finance ministry to borrow more was long on cliches and phrases but short on reassuring and convincing details,” said Tamas Varga of oil brokerage PVM.
“Deflationary pressure on producer prices remained entrenched in September amidst lax consumer demand.”
The negative news from China outweighed market concerns over the lingering possibility that an Israeli response to Iran’s Oct. 1 missile attack could disrupt oil production.
The U.S. said on Sunday it will send troops to Israel along with an advanced anti-missile system in a highly unusual deployment meant to bolster the country’s air defenses.
“General feeling is that markets are treading water ahead of the Israeli response to Iran, with no real direction for prices until the situation in the Middle East is clearer,” said Panmure Liberum analyst Ashley Kelty.
The U.S. has been privately urging Israel to calibrate its response to avoid triggering a broader war in the Middle East, officials say, with President Joe Biden publicly voicing his opposition to an Israeli attack on Iran’s nuclear sites and his concerns about a strike on Iran’s energy infrastructure.
