LONDON: Oil slipped for a second day on Tuesday as concern over China’s plan for growth and uncertainty over the pace of U.S. interest rate cuts offset the prospect of a tighter market due to continued OPEC+ supply restraint.
China set an economic growth target for 2024 of around 5%, similar to last year’s goal and in line with analysts’ expectations, but the lack of big ticket stimulus plans to prop up its struggling economy disappointed investors.
Brent crude fell 42 cents, or 0.5%, to $82.38 a barrel by 1213 GMT, while U.S. West Texas Intermediate (WTI) was down 39 cents, or 0.5%, to $78.35. Brent has gained about 7% this year.
“Public enemy No 1 of a protracted rally and the $90 oil price is the uncertainty surrounding interest rate cuts,” said Tamas Varga of oil broker PVM, who added that concern over China’s growth target was adding downward pressure.
The U.S. Federal Reserve is under no urgent pressure to cut interest rates given a “prospering” economy and job market, Atlanta Fed President Raphael Bostic was reported on Monday as saying.
Oil inches lower amid profit taking on OPEC+ cut extension
Some support came from the prospect of a tighter market after members of the Organization of the Petroleum Exporting Countries and its allies (OPEC+) on Sunday extended their voluntary oil output cuts of 2.2 million barrels per day (bpd) into the second quarter.
“The market has been moving higher in recent weeks amid improving fundamentals. Rising spot prices indicate the physical market has begun to tighten amid a host of other supply-side disruptions,” analysts at ANZ said in a note on Monday.
Even so, the latest round of U.S. inventory reports are expected to show crude stocks increased about 2.6 million barrels last week, while distillates and gasoline stockpiles are forecast to decline.
The first of this week’s two inventory reports, from the American Petroleum Institute industry group, is due out at 2130 GMT.
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