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On Tuesday, 8 October, global oil prices began to decline after a significant rise the day before. The reason for this was the market’s reaction to the news from China, where the National Development and Reform Commission (NDRC) did not announce the expected large-scale economic stimulus. This lack of decisive action disappointed investors and put pressure on global oil prices.
Thus, December futures for Brent crude oil on the London ICE Futures exchange fell by $1.43 (1.77%) to $79.50 per barrel. This happened after the price of Brent rose by $2.88 (3.7%) on Monday, reaching $80.93 per barrel, the highest level since the end of August.
November futures for US crude oil WTI also declined in electronic trading on the New York Mercantile Exchange (NYMEX) by $1.45 (1.88%) to $75.69 per barrel. In the previous trading session, WTI rose by $2.76 (3.7%) to reach $77.14 per barrel, which was also the highest since the end of August.
The market was pressured by traders’ expectations that the Chinese authorities would introduce powerful new measures to support the economy, given the global challenges the country faces. Despite statements by NDRC representatives about confidence in achieving economic goals and promises to continue supporting the economy, the lack of specific incentives that market participants had hoped for led to a decline in oil prices.
This disappointment among investors underscores the importance of the Chinese economy for the global oil market, as any uncertainty in Beijing’s stimulus policy immediately affects price dynamics.
