Oil prices experienced a significant decline on Monday, retreating in response to data from China, the largest importer, which indicated a continuing deflationary trend, while plans for fiscal stimulus from the country fell short of expectations.
Crude prices were also influenced by discussions regarding a potential ceasefire in the Middle East. Concerns over the conflict’s escalation had previously driven oil prices up for two consecutive weeks.
Brent oil futures for December delivery dropped by 1.8 percent, settling at $77.65 per barrel, while West Texas Intermediate crude futures also fell by 1.8 percent, reaching $73.54 per barrel by 19:48 ET (23:48 GMT).
A monthly report from the Organization of Petroleum Exporting Countries (OPEC) is set to be released later in the day, which is expected to offer further insights into supply dynamics.
China’s persistent disinflation and underwhelming fiscal measures
Recent data from China revealed that consumer inflation unexpectedly slowed in September, and producer inflation has now contracted for nearly two years.
This data suggests a lasting deflationary trend in the world’s largest oil importer, which raises concerns about future demand.
Mixed signals surrounding additional stimulus measures further dampened market sentiment. Over the weekend, China’s finance ministry announced intentions to unlock further fiscal stimulus, but offered little information regarding the timing or scale of these initiatives.
This announcement disappointed markets, especially as traders have grown increasingly frustrated with Beijing’s slow pace in providing economic support.
In late September, China had unveiled a series of monetary stimulus measures aimed at bolstering the economy, but enthusiasm for these efforts has faded.
As the world’s largest oil importer, China remains a critical factor for oil markets, grappling with ongoing deflation and weakening economic growth.
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