Oil Dips On Demand Concerns

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Oil Dips On Demand Concerns

Oil Dips On Demand Concerns, China Remains The Key

Oil prices remained negative during Monday's session as demand concerns became the dominant theme in the markets. In fact, the demand concerns have even offset the tighter supply outlook for this year.

Amidst all of this, Chinese inflation data has raised concerns about the demand coming from one of the world's biggest oil importers. The data shows that the oil demand from China remained weak during the 2024's first 2 months.

These fears of a slowdown in demand were further exacerbated as the interest rate policy of the USA remains uncertain. The recent NFP data also shows resilience in the US labor market, which has raised doubts about the timeline of rate cuts.

Brent &Amp;Amp; Wti Futures Down By 0.7% - 0.8%

For now, the Brent oil futures contract for May is trading at $81.52 with a change of -0.7%. On the other hand, the WTI futures are trading at $76.91 with a change of -0.8%.

The inflation data from China also shows a reduction in the Chinese PPI. This is a sign that the factories from China are still under pressure due to weak demand.

look at the Chinese import data shows that 10.74 million barrels were imported every day between Jan - Feb. This is an increase of 3.3% y/y but a significant reduction from December's print of 11.39 million barrels.

Another piece of news that is bearish for the oil markets is the 2024 GDP target set by China. The target was underwhelming and didn't shed light on any future stimulus measures.

The bottom line is that sluggish demand in 2024 is no longer something imagined by an economist. The data coming so far from China and the USA actually hints at exactly this!

Now, the oil market is looking towards the US inflation data along with any clues about the interest policy from the Fed. In theory, rate cuts in the USA will boost the oil demand which will drive the prices higher.

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