Oil slips on concern Chinese stimulus not enough to boost demand
Investors reassess ability of Beijing’s stimulus plans to boost the economy enough to drive more fuel demand growth
25 September 2024 - 07:57
byLaila Kearney and Jeslyn Lerh
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Singapore — Oil prices fell on Wednesday as investors reassessed the ability of China’s stimulus plans to boost the economy enough to drive more fuel demand growth in the world’s largest crude importer.
Brent crude futures dropped 17c, or 0.2%, at $75 a barrel by 4.15am GMT. US West Texas Intermediate crude fell 24c, or 0.3%, at $71.32 a barrel.
Prices rose about 1.7% on Tuesday after China announced its most aggressive economic stimulus since the Covid-19 pandemic, with interest rate cuts and government funding.
Analysts, however, warned that more fiscal help was needed to boost confidence in the world’s second-largest economy and that eroded the initial effect on oil prices.
“The lack of a more concrete fiscal approach still instils some reservations over whether the economic boost can be sustained,” said Yeap Jun Rong, market strategist at IG.
Yeap said there was an overall lack of traction to the oil market, with trades lower than usual, which was probably also due to a drop in US consumer confidence. It fell in September to its lowest on three years, with particular concern about the availability of jobs.
Still, declining US crude oil and fuel stockpiles provided some support for the market, which has generally risen since prices fell to their lowest since 2021 on September 10.
US oil stockpiles dropped by 4.34-million barrels last week while petrol inventories fell by 3.44-million barrels and distillate stocks fell by 1.12-million barrels, according to market sources citing American Petroleum Institute figures on Tuesday.
An intensifying conflict in the Middle East between Iran-backed Hezbollah in Lebanon and Israel also supported crude prices, with cross-border rockets launched by both sides increasing fears of a broadening war in the key producing region.
Hezbollah on Wednesday confirmed that senior commander Ibrahim Qubaisi was killed by Israeli air strikes on the Lebanese capital as Israel announced earlier. Israel said Qubaisi headed the group’s missile and rocket force.
A hurricane threatening the US Gulf Coast has changed course towards Florida and away oil and gas-producing areas near Texas, Louisiana and Mississippi.
Support our award-winning journalism. The Premium package (digital only) is R30 for the first month and thereafter you pay R129 p/m now ad-free for all subscribers.
Oil slips on concern Chinese stimulus not enough to boost demand
Investors reassess ability of Beijing’s stimulus plans to boost the economy enough to drive more fuel demand growth
Singapore — Oil prices fell on Wednesday as investors reassessed the ability of China’s stimulus plans to boost the economy enough to drive more fuel demand growth in the world’s largest crude importer.
Brent crude futures dropped 17c, or 0.2%, at $75 a barrel by 4.15am GMT. US West Texas Intermediate crude fell 24c, or 0.3%, at $71.32 a barrel.
Prices rose about 1.7% on Tuesday after China announced its most aggressive economic stimulus since the Covid-19 pandemic, with interest rate cuts and government funding.
Analysts, however, warned that more fiscal help was needed to boost confidence in the world’s second-largest economy and that eroded the initial effect on oil prices.
“The lack of a more concrete fiscal approach still instils some reservations over whether the economic boost can be sustained,” said Yeap Jun Rong, market strategist at IG.
Yeap said there was an overall lack of traction to the oil market, with trades lower than usual, which was probably also due to a drop in US consumer confidence. It fell in September to its lowest on three years, with particular concern about the availability of jobs.
Still, declining US crude oil and fuel stockpiles provided some support for the market, which has generally risen since prices fell to their lowest since 2021 on September 10.
US oil stockpiles dropped by 4.34-million barrels last week while petrol inventories fell by 3.44-million barrels and distillate stocks fell by 1.12-million barrels, according to market sources citing American Petroleum Institute figures on Tuesday.
An intensifying conflict in the Middle East between Iran-backed Hezbollah in Lebanon and Israel also supported crude prices, with cross-border rockets launched by both sides increasing fears of a broadening war in the key producing region.
Hezbollah on Wednesday confirmed that senior commander Ibrahim Qubaisi was killed by Israeli air strikes on the Lebanese capital as Israel announced earlier. Israel said Qubaisi headed the group’s missile and rocket force.
A hurricane threatening the US Gulf Coast has changed course towards Florida and away oil and gas-producing areas near Texas, Louisiana and Mississippi.
Reuters
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