Oil Prices Fall Amid Concerns Over China Demand
Oil Prices Extend Losses
Oil prices continued their downward trend on Monday, driven by worries about sluggish demand in China. Despite geopolitical tensions in the Middle East and Russia, concerns about China’s demand overshadowed other factors, limiting the decline.
Market Performance
International benchmark Brent crude fell by 0.6% to $81.60 a barrel, while U.S. West Texas Intermediate (WTI) dropped by the same percentage to $77.51. Both benchmarks experienced losses last week, with Brent down 1.8% and WTI down 2.5%.
Factors at Play
The market sentiment was influenced by concerns over weak demand in China, despite OPEC+ extending supply cuts. Mixed signals from U.S. jobs data also led to traders adjusting their positions. However, the market’s losses were offset by heightened geopolitical risks, including ongoing conflicts in the Middle East and Russia.
China’s Economic Outlook
China set an ambitious economic growth target for 2024, aiming for around 5% growth without significant stimulus. The country’s imports of oil showed growth in the first two months of the year compared to the previous year, but the pace of increase has slowed, reflecting softer demand from the world’s largest buyer.
Supply Dynamics
OPEC+ agreed to prolong voluntary oil output cuts of 2.2 million barrels per day into the second quarter, aiming to stabilize the market. Meanwhile, U.S. job growth accelerated in February, but concerns about rising unemployment rates and moderate wage gains kept the possibility of a June interest rate hike on the table.
Geopolitical Uncertainties
Tensions escalated in the Middle East, as ceasefire talks between Hamas and Israel stalled. In Russia and neighboring countries, concerns about escalating conflicts outside of Ukraine heightened fears. Moldova’s president signed a defense cooperation accord with France, citing renewed efforts by Russia to destabilize the region.
