Oil drops as US storm threat subsides, China's stimulus disappoints
The oil prices continued to fall on Monday, as investors disappointed by China's stimulus program and the threat of disruptions in supply from a storm in the United States. Oil prices continued to fall on Monday as the threat of a supply disruption from a U.S. storm eased and after China's stimulus plan disappointed investors seeking fuel demand growth in the world's No.
Brent crude futures fell 31 cents or 0.4% to $73.56 a bar by 0340 GMT, while U.S. West Texas intermediate crude futures were down 38 cents or 0.5% at $70 a bar.
Last Friday, both benchmarks dropped more than 2%.
In a note, IG analyst Tony Sycamore stated that Beijing's stimulus package, announced on Friday at the National People's Congress standing committee meeting, fell short of expectations. He added that its ambiguous forward guidance indicated only modest stimuli for housing and consumption.
ANZ analysts stated that the lack of fiscal stimulus in China implied policymakers had left space to assess the impact of policies introduced by the next U.S. Administration.
The note added that "the market will now focus on the Politburo Meeting and Central Economic Work Conference, which we expect to announce more pro-consumption anticyclical measures in December."
The oil consumption in China has barely increased in 2024, as the country's economic growth has slowed. Gasoline use has decreased with the rapid rise of electric vehicles, and liquefied gas has replaced diesel in truck fuel.
After the storm Rafael, oil prices also fell after fears of a disruption in supply from the Gulf of Mexico have subsided.
According to the offshore energy regulator, more than a quarter of U.S. Gulf of Mexico crude oil production and 16% of natural-gas output were still offline on Sunday.
Shell and Chevron both announced on Sunday that they will begin redeploying personnel back to their Gulf of Mexico platform to resume operations.
The global economy is a little uncertain due to the policies of U.S. president-elect Donald Trump. However, expectations that he would tighten sanctions against OPEC producers Iran & Venezuela and reduce oil supply on global markets helped oil prices rise more than 1% in last week.
Executives and industry experts have said that the oil markets are also supported by the strong demand of U.S. refining companies, who expect to operate their plants above 90% capacity due to low crude inventories and improved demand for gasoline and Diesel. (Reporting and editing by SonaliPaul; Florence Tan)
(source: Reuters)
