Concerns about sluggish demand in China caused oil prices to continue their decline on Monday, despite the presence of geopolitical risks in the Middle East and Russia that limited the decrease.
At 07:23 GMT, Brent futures dropped by 12 cents, or 0.2 percent, to $81.96 per barrel, while U.S. West Texas Intermediate (WTI) fell by 21 cents, or 0.2 percent, to $77.8.
Read more: Oil prices rise as demand in U.S. and China soars
Both Brent and WTI experienced losses last week, with Brent down by 1.8 percent and WTI 2.5 percent lower. These declines were attributed to bearish Chinese data indicating weaker demand from the world’s top crude oil importer.
Hiroyuki Kikukawa, president of NS Trading, a unit of Nissan Securities, stated that concerns about weak demand in China outweighed the impact of OPEC+’s decision to extend supply cuts. He also noted that mixed signals from U.S. jobs data led some traders to adjust their positions. However, he added that the losses in oil prices would be limited due to increased geopolitical risks, such as the ongoing conflict in the Middle East and the potential expansion of conflicts in Russia and its neighboring countries.
Recent data revealed that U.S. job growth accelerated in February, but an increase in the unemployment rate and a moderation in wage gains kept the possibility of a June interest rate cut by the Federal Reserve on the table.
China’s ambitious growth target for 2024
China announced an economic growth target of around 5 percent for 2024 last week, which many analysts considered ambitious without significant additional stimulus. Data also indicated that China’s crude oil imports in the first two months of the year were higher than the same period in 2023 but weaker compared to previous months, reflecting a trend of declining purchases by the world’s largest buyer.
OPEC+ extends oil production cuts
On the supply side, the Organization of the Petroleum Exporting Countries (OPEC) and its allies, collectively known as OPEC+, agreed earlier this month to extend voluntary oil production cuts of 2.2 million barrels per day into the second quarter. Analysts at ANZ Research noted that this extension could lead to a tightening of the market as demand recovers from its seasonal slowdown.
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