Now Reading
Oil Falls 1% as China’s Economic Recovery Disappoints, Dollar Firms

Oil Falls 1% as China’s Economic Recovery Disappoints, Dollar Firms

Oil fell around 1% on Wednesday as disappointing economic growth in China and a stronger U.S. dollar stoked worries about energy demand, while fears over supply disruptions due to intensifying conflict in the Red Sea eased.

Brent crude futures fell 87 cents, or 1.1%, to $77.42 a barrel by 1:19 p.m. EST (1819 GMT). U.S. West Texas Intermediate crude futures (WTI) were down 49 cents, or 0.7%, at $71.91.

The naval and air conflicts in the Red Sea have not supported oil prices despite mounting concern about tankers having to pause or reroute, raising shipping costs and slowing deliveries. Tensions remained high after the U.S. mounted fresh strikes against Iran-aligned Houthi militants in Yemen on Tuesday after a Houthi missile hit a Greek vessel.

The International Energy Agency (IEA) expects oil markets to be in a “comfortable and balanced position” this year, despite Middle East tensions amid a rising supply and slowing demand growth outlook, its executive director Fatih Birol told the Reuters Global Markets Forum.

China’s economy in the fourth quarter expanded by 5.2% year on year, missing analysts expectations and calling into question forecasts that Chinese demand will fuel 2024 global oil growth.
The economic data “doesn’t end the headwinds over crude oil demand, the Chinese outlook for 2024 and 2025 is still bleak,” said Priyanka Sachdeva, senior market analyst at Phillip Nova.

“(The) oil industry was backing the notion that, despite a bumpy recovery, oil demand from China has been resilient and will likely reach record levels in 2024.”

Still, China’s oil refinery throughput in 2023 rose 9.3% to a record high, indicating elevated demand even if it lagged some analysts’ expectations.

Other signs of steady Chinese demand have also appeared. Limiting oil price losses, an optimistic OPEC stuck to its forecast for relatively strong growth in global oil demand in 2024. OPEC said that 2025 will bring a “robust” increase in oil use, led by China and the Middle East.

“The report suggests the market is going to be undersupplied,” said Phil Flynn, an analyst at Price Futures Group.

See Also

Meanwhile, the U.S. dollar hovered near a one-month high after comments from Federal Reserve officials lowered expectations for aggressive interest rate cuts. A stronger greenback reduces demand for dollar-denominated oil from buyers using other currencies.

“Higher rates can lead to a weaker outlook for oil demand as economic activity tends to cool in a high interest rate environment, leaving oil prices vulnerable,” Sachdeva said.

In U.S. supply, domestic crude stockpiles were expected to have fallen last week by about 300,000 million barrels, a Reuters poll showed ahead of weekly inventory data from the American Petroleum Institute and government, due on Wednesday and Thursday, respectively.

Reuters

SUBSCRIBE TO GET OUR NEWSLETTERS:

SUBSCRIBE TO GET OUR NEWSLETTERS:

Scroll To Top

We have detected that you are using AdBlock Plus or other adblocking software which is causing you to not be able to view 360 Mozambique in its entirety.

Please add www.360mozambique.com to your adblocker’s whitelist or disable it by refreshing afterwards so you can view the site.