HOUSTON: Oil prices fell by more than $2 a barrel on Monday after China’s stimulus plan disappointed investors seeking fuel demand growth in the world’s second-biggest oil consumer and as the U.S. dollar edged higher.
Brent crude futures were down $2.00, or 2.71%, to $71.87 a barrel by 9:46 a.m. CST (1546 GMT) while U.S. West Texas Intermediate crude futures were at $68.25 a barrel, down $2.12, or 3.01%.
Both benchmarks fell more than 2% on Friday.
Donald Trump’s U.S. election victory may continue to be affecting the market, said Phil Flynn, senior analyst for the Price Futures Group.
“The election with Trump’s promise to “drill baby, drill” has taken away some incentive to go long,” Flynn said.
Fewer traders were in the market on Monday, which is the federal Veterans Day holiday, Flynn said, contributing to the decline in prices as markets eye demand threats.
The U.S. dollar index, a measure of its value relative to a basket of foreign currencies, slightly overshot the highs seen right after the Nov. 5 U.S. presidential election, with markets still waiting for clarity about future U.S. policy.
India says oil prices would have rocketed without its Russian imports
A stronger dollar makes commodities denominated in the U.S. currency, such as oil, more expensive for holders of other currencies and tends to weigh on prices.
In China, consumer prices rose at the slowest pace in four months in October while producer price deflation deepened, data showed on Saturday, even as Beijing doubled down on stimulus to support the sputtering economy.
“Chinese inflation figures were again weak, with the market fearing deflation, particularly as the yearly change in the producer price index fell further into negative territory … Chinese economic momentum remains negative,” said Achilleas Georgolopoulos, a market analyst at brokerage XM.
The latest support measures will not revive China’s oil demand growth or crude oil imports, said Tamas Varga, an analyst at oil broker PVM.
“After last week’s U.S. presidential election, attention is slowly drifting back to the underlying fundamentals,” Varga said.
Oil prices also eased after concerns about potential supply disruptions from storm Rafael in the U.S. Gulf of Mexico subsided.
More than a quarter of U.S. Gulf of Mexico oil and 16% of natural gas output remained offline on Sunday, according to the offshore energy regulator.
Comments
Comments are closed for this article.