Oil prices fell on Monday due to concerns about China’s economy, despite OPEC+ output cuts and a decrease in the number of oil and gas rigs in the United States. Brent crude dropped 0.7% to $76.07 a barrel, while U.S. West Texas Intermediate (WTI) crude lost 0.9% to $71.14. The decline in prices was attributed to China’s struggling property market and below-expectation retail sales and industrial output in May. Several large banks have lowered their forecasts for China’s 2023 GDP growth. China is expected to cut its benchmark loan rates to support its economic recovery. Global road traffic has also been declining, indicating slowing growth and impacting oil prices. However, China’s refinery throughput increased in May, contributing to last week’s gains. Additionally, rising Iranian oil exports and the new oil output deal by OPEC and its allies, including Saudi Arabia’s pledge to cut output in July, influenced prices.
How has China’s struggling property market and below-expectation economic performance affected global oil prices?
Article Edit: Oil prices fell on Monday due to concerns about China’s economy, despite OPEC+ output cuts and a decrease in the number of oil and gas rigs in the United States. Brent crude dropped 0.7% to $76.07 a barrel, while U.S. West Texas Intermediate (WTI) crude lost 0.9% to $71.14. The decline in prices was primarily attributed to China’s struggling property market and below-expectation retail sales and industrial output in May. These negative economic indicators have led several large banks to revise down their forecasts for China’s 2023 GDP growth. To support its economic recovery, China is expected to implement benchmark loan rate cuts.
Furthermore, the global road traffic has also been declining in recent times, which indicates slowing growth and has a direct impact on oil prices. It is worth mentioning that China’s refinery throughput increased in May, which contributed to last week’s gains in oil prices. However, the overall decline in prices can be partly attributed to rising Iranian oil exports and the new oil output deal agreed upon by OPEC and its allies. As part of this deal, Saudi Arabia has pledged to cut output in July, further influencing the downward pressure on oil prices.
The combination of these factors – concerns about China’s economy, declining global road traffic, rising Iranian oil exports, and the OPEC+ output deal – has contributed to the recent drop in oil prices. Despite the positive developments such as China’s refinery throughput increase and the output cuts by OPEC+, the overall market sentiment remains cautious due to China’s struggling property market and below-expectation economic performance.
The declining oil prices, fueled by worries about China’s economic situation and surging Iranian exports, indicate potential shifts in the global energy landscape. These developments could reshape market dynamics and impact various stakeholders, prompting industry players to closely monitor these trends.