Crude Prices Hold Ground Despite Mixed Reactions to China’s Economic Measures

Image Credit: Reuters

Oil prices remained relatively stable in early trading on Tuesday, with markets awaiting guidance from OPEC's monthly report. The previous sessions had seen declines due to concerns over China's stimulus plan and oversupply issues.

Brent crude futures dropped by 1 cent to $71.82 per barrel, while U.S. West Texas Intermediate (WTI) crude futures rose 3 cents to $68.07 per barrel. Both contracts had fallen by over 5% in the previous two days. On Friday, China announced a 10 trillion yuan ($1.4 trillion) debt package to alleviate local government financing challenges. However, analysts believe this stimulus fell short of what is needed to significantly boost economic growth.

The oil market will look for further direction in OPEC's upcoming monthly report, which may include additional downward revisions in demand forecasts through 2025, putting more pressure on prices.

Analysts from ING noted that prompt time spreads for Brent and WTI have recently collapsed, approaching contango, which suggests the physical market is well-supplied in the near term.

Additionally, the stronger U.S. dollar weighed on oil prices. As commodities like oil are priced in U.S. dollars, a stronger dollar makes them more expensive for holders of other currencies, further impacting oil prices.

 

 

 

 

 

 

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