Market Analysis

Oil prices declined on Monday following data revealing a drop in China's inflation rate, coupled with uncertainty surrounding the country’s economic stimulus plans, which fueled concerns about reduced fuel demand in the world’s largest crude importer.

By 0523 GMT, Brent crude futures had fallen 86 cents, or 1.1%, to $78.18 per barrel, while U.S. West Texas Intermediate (WTI) crude futures slipped 83 cents, or 1.2%, to $74.73 per barrel.

Both benchmarks reversed their gains from last week, shedding more than $1 per barrel on Monday before recovering some losses. Brent had gained 99 cents last week, while WTI increased by $1.18.

The negative sentiment from China overshadowed concerns about potential oil supply disruptions from a possible Israeli response to Iran's October 1 missile attack. However, the U.S. has cautioned Israel against targeting Iran's energy infrastructure.

According to data from China's National Bureau of Statistics, deflationary pressures worsened in September, as both the consumer price index and the producer price index underperformed. The latter fell by 2.8% year-on-year, marking the steepest decline in six months. Meanwhile, a press conference on Saturday left investors uncertain about the scale of the stimulus package intended to revive the world’s second-largest economy.

Priyanka Sachdeva, an analyst at Phillip Nova, noted, "China's consumer price index signals a persistent deflationary trend and weaker domestic demand despite the aggressive monetary stimulus measures announced in September."

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