Oil steadied after a decline, as lackluster economic data from China reinforced concerns about weakening demand in the world’s biggest crude importer.
Brent traded below $74 a barrel after slipping 0.8% in the previous session, with West Texas Intermediate near $71, after Chinese data on Monday showed falling refining activity and weak retail sales. The nation’s leaders have signaled stronger stimulus, but recent steps hint Beijing will likely fall short of the kind of radical action analysts believe is needed to stem a deflationary spiral.
Oil Steadies After Decline on Weak China Outlook
Crude has been trading in a narrow range since mid-October
Crude is set to end 2024 modestly lower, as expectations of a glut next year and the dour outlook in China overshadow geopolitical tensions in Russia and the Middle East. Meanwhile, European nations are set to clamp down on tankers moving Russian crude, as the US signaled it may lower a price cap on the producer’s oil to limit access to funds for the war in Ukraine.
“I’m surprised crude isn’t testing $71 and the lows of its multi-month range” given lackluster demand and Chinese consumption data, said Chris Weston, head of research for Pepperstone Group, referring to Brent. “The news flow is certainly keeping oil traders maintaining a preference to fade rallies.”
Prices have also been trading in a narrow range in recent weeks, pushing oil’s 30-day historical volatility to the lowest since August.
Meanwhile, the US Federal Reserve is expected to further lower interest rates when it meets on Wednesday. That could create room for China’s central bank to also ease monetary policy.
Bloomberg
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