West Texas Intermediate (WTI) crude oil dropped below $70 per barrel on Monday after Hurricane Rafael weakened into a storm unlikely to affect U.S. oil production in the Gulf of Mexico.
Oil prices were also pressured by concerns over Chinese oil demand. Traders were disappointed by China’s recent stimulus package, which fell short of expectations. This contributed to a bearish sentiment in the market.
At the time of writing, Brent crude was priced at $73.30 per barrel, while WTI had dropped to $69.69 per barrel.
Analysts at ANZ noted that traders will now focus on China’s upcoming Politburo meeting and the Central Economic Work Conference in December, where further pro-consumption measures are expected. On Friday, Beijing introduced additional stimulus aimed at boosting the real estate sector and consumer demand. However, oil analysts were not impressed by the measures.
Chris Weston, head of research at Pepperstone Group, told Bloomberg that the oil market had “hit a fair value” and seemed comfortable around the $70 mark. “There is US election risk that could impact growth expectations, but we don’t expect it to affect this week’s market,” Weston said.
As the world’s second-largest oil consumer and top importer, China remains a key focus for traders. Giovanni Serio, head of research at Vitol, highlighted that petrochemical demand, rather than transport, will drive future oil consumption growth in China. Speaking at the FT Asia Commodities conference, Serio explained that the demand for oil in petrochemicals could be enough to meet global plastic needs next year.
“This is going to be the driving force for oil demand in China and globally,” Serio said, emphasizing that the shift is less about decarbonization efforts and more about meeting growing demand for plastics.
Related Topics:
- Standard Chartered: U.S. Oil Production Unlikely to Surge Under Trump
- Fuel Prices to Rise: Diesel by P2.10/L, Gasoline by P1.50/L on Nov 12
- AAA Texas: Gas Prices Slowly Climbing