Oil prices continued their downward trend on Monday, following last week’s decline, amid concerns over sluggish demand in China. However, fears surrounding geopolitical tensions in the Middle East and Russia helped mitigate the drop.
At 0129 GMT, Brent futures slipped by 48 cents, representing a 0.6% decrease, settling at $81.60 per barrel, while U.S. West Texas Intermediate (WTI) fell by 50 cents, also marking a 0.6% decline, to $77.51.
Both Brent and WTI benchmarks experienced losses last week, with Brent down by 1.8% and WTI by 2.5%.
Hiroyuki Kikukawa, president of NS Trading, a unit of Nissan Securities, remarked, “Worries regarding weakened demand in China outweighed the continuation of supply cuts by OPEC+.” He noted that mixed signals from U.S. jobs data prompted some traders to adjust their positions.
Kikukawa added, “Nevertheless, the downward movement will be tempered by escalating geopolitical risks, including the uncertainty surrounding a potential ceasefire in the Hamas-Israel conflict and the potential expansion of conflict in Russia and neighboring regions.”
Last week, China announced an economic growth target of around 5% for 2024, a figure many analysts deemed ambitious without significant additional stimulus.
While China’s crude oil imports increased in the first two months of the year compared to the same period in 2023, they were lower than in previous months, indicating a trend of reduced purchases by the world’s largest buyer.
On the supply side, the Organization of the Petroleum Exporting Countries (OPEC) and its allies, known as OPEC+, agreed at the beginning of the month to extend voluntary oil output cuts of 2.2 million barrels per day into the second quarter.
Meanwhile, recent data revealed that U.S. job growth accelerated in February. However, a rise in the unemployment rate and a moderation in wage gains kept the possibility of a Federal Reserve interest rate hike in June on the table.
In the Middle East, Hamas leader Ismail Haniyeh accused Israel on Sunday of obstructing ceasefire negotiations and rejecting Hamas’ demand to end the conflict in Gaza. However, he stated that the group remains committed to seeking a negotiated resolution.
