Oil prices experienced a second consecutive day of decline on Tuesday as China’s commitments to revamp its economy amid sluggish growth post-COVID failed to inspire investors, raising concerns about reduced consumption.
Brent futures for May dropped 32 cents, or 0.4%, to $82.48 per barrel by 0757 GMT, while U.S. West Texas Intermediate (WTI) fell 41 cents, or 0.5%, to $78.33. Brent was heading for its fifth consecutive session of decline on Tuesday.
China announced plans to “transform” its economic development model and address industrial overcapacity. It set a 2024 economic growth target of around 5%, similar to the previous year’s goal and aligned with analysts’ expectations. Achieving this target, which could boost fuel consumption, may be more challenging this year due to the absence of the favorable base effect from the COVID-hit 2022, potentially impacting investor sentiment.
As oil prices faced downward pressure from concerns about the Chinese demand outlook, supply-related factors such as major producers cutting output and geopolitical tensions arising from the Israel-Gaza conflict supported crude prices.
OPEC+ decided on Sunday to extend its voluntary oil output cuts of 2.2 million barrels per day (bpd) into the second quarter to stabilize prices amid global growth concerns and increasing output outside the group.
However, there are expectations of a rise in U.S. crude oil inventories by about 2.6 million barrels last week, according to a preliminary Reuters poll on Monday. Distillates and gasoline stockpiles were forecast to decline.
“The market has been moving higher in recent weeks amid improving fundamentals. Rising spot prices indicate the physical market has begun to tighten amid a host of other supply-side disruptions,” noted analysts at ANZ in a Monday statement.
