Title: Oil Prices Fall as Chinese Demand Weakens
Date: June 20, 2023
Crude oil futures experienced a significant drop of about 2 percent in volatile trading, primarily driven by concerns over slowing oil demand growth from China, the world’s second-largest oil consumer. Additionally, market disappointment over the amount of reduction in China’s main lending interest rates further contributed to the decline in oil prices.
Brent futures for August delivery recorded a loss of $1.11, equivalent to a 1.5 percent decrease, settling at $74.98. Meanwhile, US West Texas Intermediate (WTI) crude for July delivery fell by $1.66, or 2.3 percent, closing at $70.12 in its last trading days as a US front-month contract.
The August delivery contract for West Texas Intermediate crude also experienced a decline of 2.2 percent, reaching $70.31. This contract is expected to become the front-month contract in the United States soon.
China’s decision to cut its main lending rate for the first time in 10 months, albeit by a smaller than expected 10 basis points for the five-year lending rate, added to the negative sentiment. This rate cut came in response to recent economic data indicating challenges faced by China’s retail and manufacturing sectors in maintaining the earlier year’s momentum.
An expert from the research unit of China National Petroleum Corporation (CNPC) highlighted that Chinese demand for crude oil is projected to grow at a lower rate than previously anticipated. The expert attributed this slowdown to the impact of electric cars on gasoline consumption.
Furthermore, data from the General Administration of Customs revealed that China’s crude oil imports declined in May after reaching a ten-year high in April. However, exports of low-sulfur marine fuel witnessed an increase during the same period. Another factor influencing crude prices was the rise of the dollar index against a basket of currencies, driven by data indicating a surge in home construction in the United States.
Overall, the combination of weaker Chinese demand growth expectations and other market factors led to the decline in oil prices. Market participants will closely monitor future developments in China’s oil demand and global economic indicators to assess the trajectory of oil prices in the coming months.
oil edges up on supply concerns china demand hopes
Oil Prices Plunge as Chinese Demand Weakens
Date: June 20, 2023
In recent trading, crude oil prices experienced a significant drop of around 2 percent, largely influenced by concerns regarding the slowdown in oil demand growth from China, the world’s second-largest consumer of oil. The market also reacted negatively to the news of a smaller-than-expected reduction in China’s main lending interest rates, further contributing to the decline in oil prices.
The price of Brent futures for August delivery witnessed a loss of $1.11, representing a 1.5 percent decrease, settling at $74.98. Additionally, the US West Texas Intermediate (WTI) crude for July delivery fell by $1.66, or 2.3 percent, closing at $70.12, marking its last trading days as the US front-month contract.
The August delivery contract for West Texas Intermediate crude also experienced a decline of 2.2 percent, reaching $70.31. This particular contract is expected to become the front-month contract in the United States soon.
The decision by China to cut its main lending rate for the first time in 10 months, albeit by a smaller amount than expected (10 basis points for the five-year lending rate), added to the prevailing negative sentiment. This rate cut was a response to recent economic data indicating challenges faced by China’s retail and manufacturing sectors in maintaining the growth momentum witnessed in previous years.
An expert from the research unit of China National Petroleum Corporation (CNPC) highlighted that Chinese demand for crude oil is projected to grow at a lower rate than previously anticipated. The expert attributed this slowdown to the increasing impact of electric cars on gasoline consumption.
Furthermore, data from the General Administration of Customs revealed that China’s crude oil imports declined in May after reaching a ten-year high in April. However, exports of low-sulfur marine fuel witnessed an increase during the same period. Another contributing factor to the decline in crude prices was the rise of the dollar index against a basket of currencies. This increase was driven by data indicating a surge in home construction in the United States.
In summary, the combination of weaker Chinese demand growth expectations and various other market factors led to the decline in oil prices. Market participants will closely monitor future developments in China’s oil demand as well as global economic indicators to assess the trajectory of oil prices in the coming months.
It’s disheartening to see crude oil futures falling due to both slowing oil demand and market disappointment. These setbacks are a strong indication of the global economic challenges ahead and call for strategic measures to address them effectively.