Oct 14 2024: Oil prices fell sharply on Monday, reversing nearly all the gains made last week, as concerns over weaker demand from China weighed on the market. New data revealed a decline in China’s inflation rate, coupled with uncertainty surrounding the country’s economic stimulus efforts, raising doubts about fuel demand from the world’s largest crude importer.
By 06:49 GMT, Brent crude futures dropped by $1, settling at $78.04 per barrel, while U.S. West Texas Intermediate (WTI) crude futures also fell by $1, or 1.3%, to $74.56 per barrel.
Both oil benchmarks lost more than 1.5% earlier in the session before recovering slightly. Last week, Brent gained 99 cents, while WTI rose by $1.18.
China’s deflationary pressures deepened in September, according to official data released on Saturday. A press conference that same day offered little clarity regarding the scope of a stimulus package to support the world’s second-largest economy, leaving investors uncertain.
Concerns about China’s economy overshadowed market worries about a potential Israeli retaliation to Iran’s October 1 missile attack, which could disrupt oil production. However, the U.S. has advised Israel not to target Iranian energy infrastructure.
Priyanka Sachdeva, an analyst at Phillip Nova, commented on the situation: “The consumer price index from China points to ongoing deflation and weaker domestic consumption, despite aggressive monetary stimulus efforts by Chinese authorities in September.”
The consumer price index fell short of expectations, and the producer price index declined at the fastest rate in six months, dropping 2.8% year-on-year, according to China’s National Bureau of Statistics. IG market analyst Tony Sycamore criticized Saturday’s briefing by the Chinese finance ministry, calling it “a flop.”
“The fiscal measures needed to counter downside risks to growth and revive consumer confidence are notably absent,” Sycamore added.
