Oil Down As China Economy Falters

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Oil Down As China Economy Falters

Oil Down By 1% As China'S Economy Falters

Oil prices came under pressure during Wednesday's session as the economic activity in China falters. Being a top crude oil importer, any weakness from China directly impacts the crude oil prices as well.

As China's economic weakness continues, March's contract for Brent crude futures declined by $0.83, while April's contract declined by $0.85. Overall, the decline in both futures contracts was around 1%.

Wti Futures Down By $0.95

Similarly, the WTI was down by $0.95, which means a decline of around 1.2%. After the decline, the WTI's trading price was $76.87, which suggests that the oil is retreating further away from the $80 handle. During January, China's manufacturing activity contracted once again, according to the official survey.

The recent development in the Chinese economy, which fueled the decline of oil, was related to Evergrande. A court ruled in favor of liquidating Evergrande, also listed on Hong Kong's stock exchange.

To give you a perspective of the Evergrande's size, it accounts for almost 25% of China's GDP. So once the liquidation news came to light, it was only natural for the crude oil to get on the back foot.

Elsewhere, the OPEC & other big players believe that China's consumption will be the primary driver of oil demand in 2024. According to an expert in the oil market, China's factory data confirms that oil will remain tied to China in 204.

On the US side, no change is expected in the interest rates, which means we can forget about a surge of economic growth on the back of rate cuts.

According to several economists, the interest rate cuts will only come after June, which means no jump in household spending is gonna happen in the next few months.

There are also reports that the West is producing a record amount of crude oil, which means the oil prices will remain capped. In addition, the economic growth in China & even the USA is expected to remain weak, which is also negative for oil.

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