Oil prices fell by more than $1 a barrel, dropping over 1.5% in early trading on Monday. This decline followed disappointing inflation data from China and uncertainty surrounding Beijing’s economic stimulus plans, which raised fears about demand.
By 0020 GMT, Brent crude futures had decreased by $1.26, or 1.59%, settling at $77.78 per barrel. Similarly, U.S. West Texas Intermediate crude futures fell $1.20, also down 1.59%, to $74.36 per barrel.
Negative economic news from China overshadowed market worries about potential disruptions to oil production stemming from a possible Israeli response to Iran’s missile attack on October 1. The U.S. has warned Israel against targeting Iran’s energy infrastructure.
China’s inflation pressures worsened in September, according to official data released on Saturday. A press conference on the same day left investors uncertain about the size of any stimulus package aimed at boosting the struggling economy.
The consumer price index rose by just 0.4%, missing expectations, while the producer price index saw its steepest decline in six months, dropping 2.8% year-on-year, as reported by the National Bureau of Statistics.
Tony Sycamore, an analyst at IG, commented, “Saturday’s briefing by the China Ministry of Finance was disappointing. The fiscal measures needed to reduce risks to growth and encourage consumer spending are noticeably absent.”
Beijing announced plans to increase debt issuance but did not provide specific figures.
Both oil benchmarks had increased by 1% for the week on Friday as investors considered potential supply disruptions in the Middle East and the impact of Hurricane Milton on fuel demand in Florida.
In response to Iran’s attack on Israel, the U.S. expanded sanctions against Iran on Friday, targeting its “ghost fleet” that transports illicit oil around the world.
In the U.S. market, energy companies added oil and natural gas rigs for the first time in four weeks last week, according to Baker Hughes, a leading energy services firm. The oil and gas rig count, which serves as an early indicator of future output, increased by one to reach 586 for the week ending October 11.
Hurricane Milton temporarily boosted short-term demand in the U.S. due to evacuations increasing gasoline consumption. However, overall weak demand continued to dominate the market outlook.
Additionally, oil giant BP reported a $600 million drop in its third-quarter profits on Friday, citing weak refining margins amid a global slowdown in oil consumption.
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