Brent and WTI Drop as U.S. Storm Concerns Fade and China’s Economic Measures Fall Short

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Oil prices continued to decline on Monday, driven by the easing threat of a supply disruption from a U.S. storm and disappointment over China’s stimulus plan, which failed to meet expectations for boosting fuel demand in the world's second-largest oil consumer.

Brent crude futures dropped by 19 cents (0.3%) to $73.68 per barrel, while U.S. West Texas Intermediate (WTI) crude futures fell 25 cents (0.4%) to $70.13 per barrel. Both benchmarks had already fallen more than 2% on Friday.

China's stimulus package, unveiled during the National People's Congress (NPC) standing committee meeting on Friday, did not meet market hopes. IG market analyst Tony Sycamore noted that the plan’s unclear guidance suggested only modest support for housing and consumption.

Analysts at ANZ pointed out that the absence of direct fiscal stimulus signals that Chinese policymakers are likely waiting to assess the effects of the policies under the new U.S. administration. They expect more pro-consumption measures to be announced at the upcoming Politburo meeting and Central Economic Work Conference in December.

Oil consumption in China, a key driver of global demand growth in recent years, has barely increased in 2024, as its economic growth slows. Gasoline use has dropped due to the rise of electric vehicles, and liquefied natural gas is replacing diesel for truck fuel. Additionally, oil prices softened as concerns over supply disruptions from U.S. storm Rafael diminished.

More than a quarter of U.S. Gulf of Mexico oil and 16% of natural gas output remained offline on Sunday, according to offshore energy regulators.

Looking ahead, uncertainty surrounding U.S. President-elect Donald Trump’s policies is clouding the global economic outlook. However, speculation that he could impose stricter sanctions on OPEC producers Iran and Venezuela and reduce oil supply to global markets helped oil prices gain more than 1% last week.

Oil markets are also receiving support from strong demand from U.S. refiners, who are expected to operate their plants at over 90% capacity, driven by low inventories and improving demand for gasoline and diesel.

 

 

 

 

 

 

 

 

 

 

 

Paraphrasing text from "Reuters"all rights reserved by the original author.